CANADA DATA: Labour Survey Expected To Show Steadier Jobs After Swings [1/2]

• US rates have seen little change so far through the US session, broadly holding the overnight modest rally on broad risk-off moves despite WTI futures paring a sizeable part of earlier losses (-0.4% vs -1.6% as US desks filter in).
• Fed Funds futures cumulative cuts from 3.87% effective: 16.5bp Dec, 26bp Jan, 34.5bp Mar, 40.5bp Apr, 55bp Jun.
• SOFR futures mostly sit +0.015-0.025 looking out to end-2027, with the terminal implied yield at 3.095% (H7) 2bp below yesterday’s highest close since August but still dovish by multi-month standards.
• Dec FOMC pricing continues to hold nearly all of the hawkish adjustment seen after Powell noted a strongly divided committee around December cut prospects at Wednesday’s press conference.
• Fed VC Supervision Bowman (permanent voter, firm dove) had been one of the few events of note on today’s docket but ended up not discussing monetary policy contrary to the event description.
• Tomorrow sees a pause in scheduled Fedspeak, with attention likely on the October ADP and ISM Services reports plus any spillover to front rates from Treasury’s QRA. 

RRP usage slips to $16.893B with 13 counterparties this afternoon - from $23.792B Monday. Compares to $2.435B on October 24 (lowest level since mid-March 2021) and the year's highest usage of $460.731B on June 30.

The next two days see some private sector labor indicators that likely will see particular attention this week with a lack of BLS releases. ADP is expected to see some stabilization after recent job losses, with added questions over how its regular monthly report correlates with a newly published weekly series, whilst the Challenger report offers a look at hiring plans for a second important seasonal month. 

• The ADP employment report on Wednesday is expected to point to a 40k increase in private payrolls in October after a surprisingly weak -32k in September and -3k in August.
• Surprisingly released last week, the ADP weekly “Pulse” report pointed to private payrolls growth of 57k over the course of the four weeks ending Oct 11, reported as an average weekly increase of 14.25k.
• There are question marks as to how this weekly series correlates with the longer standing monthly report but with clearly some expectation that the labor market stabilized in October vs prior ADP-implied additional weakness.  
• The Challenger report on Thursday meanwhile will be watched not only for its usual summary of layoffs in October but also the second useful month for hiring plans, being highly sensitive to seasonal hiring typically announced in September and October.  
• Layoffs encouragingly fell 26% Y/Y in last month’s report for September, the largest decline since January, albeit flattered by an unusually high Sep 2024.
• Hiring plans were extremely low however in a key month of September, at just 117k vs 404k last year, and should be watched for October. There should be a 250k contribution from Amazon in October, although that was also the case in Oct 2024, i.e. the timing of Amazon plans wasn’t behind last month’s weak reading. Rather, anecdotal evidence points to broader hiring lethargy, with Target for instance in 2024 announcing 100k of seasonal workers (as has been the case since 2021) but this year it has in part instead offered additional hours to its current employees.