EGBS: ECB Pricing Limiting Short-end Gains; German 2s10s Now 2bps Flatter

{US} STIR: Modest dovish adjustments in Fed pricing after the 10:00 NY data, with an uptick in the quits rate and downtick in the layoff rate within the JOLTS jobs data outweighed by the softer-than-expected job openings release and weak consumer confidence report outlined elsewhere (a reminder that Tsy Secretary Bessent was the latest to push back against drawing major economic inferences from survey data earlier today).

• The move was two-way in nature, with initial dovish repricing faded before establishing itself.
• That leaves pricing for meetings through the end of ’25 little changed to 2bp more dovish vs. pre-data levels.
• 2bp of easing showing for May, 16bp through June, 38bp through July, 60bp through September, 78bp through October and 96bp through December.

The JOLTS report saw a second month with lower-than-expected job openings, and this time by a greater extent in March. However, layoffs fell to their lowest since June and quit rates surprisingly inched higher, the latter still low historically but up nearly 0.2pps from November lows. These two conflicting findings should be viewed in the context of the vacancy to unemployed rate still being higher relatively than quit rates. 

• Job openings fell to 7192k (sa, cons 7500k) in March after a downward revised 7480k (initial 7568k) in Feb.
• Ratio of openings to unemployed also fell to 1.02 after a downward revised 1.06 in Feb, inching below the 1.03 in September for technically the lowest since Apr 2021.
• It had averaged 1.1 through Jun 2024-Feb, between the 1.2 in 2019 and 1.0 in 2017-18.
• Hire rates continued to plateau in March, with an overall rate at 3.39% having averaged 3.38% in an extremely narrow range since October. This remains below the 3.9% averaged in 2019 and 3.8% averaged in 2017-18.
• Layoffs fell to 1558k in March from 1780k for their lowest since Jun 2024. Government layoffs edged higher to 107k after 100k in Feb (averaged 83k in 2024), indicating only modest attrition compared to more ‘normal’ times whilst federal layoffs fell to 8k after 19k (averaged 6k in 2024).
• Quits rates meanwhile saw what to us was a surprising increase albeit it one exaggerated by rounding, lifting to 2.09% after two months at 2.05/2.04%. It’s the highest quit rate since Jul 2024, having lifted off a recent low of 1.91 in Nov, although are still low historically vs 2.3% in 2019 and 2.2% in 2017-18.
• The increase in quits was driven by the private sector (2.25 to 2.32%) whilst total government quits held at a rounded 0.8% for a fifth consecutive month. Within the latter, federal quits ticks a tenth higher to 0.5% after three months at 0.4%. That included February being revised up from 0.3% initially at what had bene a fresh low since late 2016. 

US consumer confidence dropped for a 5th consecutive month in April following the November peak per the Conference Board's survey, with the Composite to 86.0 (88.0 expected, 93.9 prior upwardly revised from 92.9).

• That was the lowest since May 2020, so clearly indicative of weak activity (the "present situation" index dipped just 0.9 points, to 133.5).
• But more concerning was the Expectations index falling 12.5 points to 54.4 which was the lowest level since October 2011. The report notes that this is "well below the threshold of 80 that usually signals a recession ahead".
• The report noted "the three expectation components—business conditions, employment prospects, and future income—all deteriorated sharply, reflecting pervasive pessimism about the future", with the percentage of respondents expecting fewer jobs in the next six months rising to nearly April 2009 levels (32.1%).
• On that topic, the closely-watched differential between jobs perceived as "plentiful" vs "hard to get" fell to 15.1 points (plentiful 31.7%, 2nd highest since March 2021, with hard to get 16.6%), down for the 4th consecutive month and indicative of a continued tick-up in the unemployment rate (see chart).
• The survey also points out that "expectations about future income prospects turned clearly negative for the first time in five years", and purchase plans deteriorated.
• It's little surprise why: "tariffs are now on top of consumers’ minds, with mentions of tariffs reaching an all-time high. Consumers explicitly mentioned concerns about tariffs increasing prices and having negative impacts on the economy. Inflation and high prices remained important for consumers’ views about the economy: while the majority complained about the high cost of living, there were also some references to declines in the prices of gas and some food items. There were also numerous mentions of stock prices and uncertainty."
• As such this is a report showing a very clear deterioration in expectations, though the actual current situation isn't quite as negative. The degree to which the soft data translates into the hard data over coming months is the key question, but it's clear that sentiment is consistent with recession.