FREIGHT: Mideast Tanker Surplus Climbs from Decade Low

Wednesday's Europe rates/bond options flow included:

• ERZ5 98.25c, sold at 0.5 in 10k. Earlier: ERZ5 98.25c, bought for half in 33k
• SFIZ5 96.30/96.40/96.50c fly, bought for 1 in 4k
• SFIZ5 96.20/96.30cs 1x2, bought for 0.25 in 2.5k.
• SFIH6 96.25/96.05/95.85p fly, bought for 4.75 in 5.5k

Two indicators that have recently been un-paywalled in response to the government shutdown offer alternative tracking estimates for jobs growth. The Revelio estimate implies no further softening than recent trends in the latest BLS payrolls data published to August (3mth average 29k, 6mth 64k or private sector averages of 29k and 67k) whilst others are weaker. 

• Revelio Labs estimate jobs growth of 60k in September with growth driven by education and health services, an area that has been a major driver of nonfarm payrolls growth in the BLS report for some time now. See their range of labor-related releases here.
• Carlyle Group comes up with a more pessimistic estimate, eyeing a 17k increase in September. This is based on operational data from its portfolio companies which employ more than 700k people globally (see more, here). From the linked interview with Bloomberg: “What’s so interesting about the moment we’re in is the discrepancy between payrolls and the other economic indicators we’re looking at,” said Jason Thomas, Carlyle’s head of global research and investment management. “If you looked at the employment data, you’d think it’s an economy that’s on the cusp of or in a recession. That is nowhere else in the data.”
• Whilst both soft, and likely close to or below payrolls breakeven estimates, both are tracking stronger than the widely known and publicly available ADP release. The latter saw its biggest private payrolls drop (-32k) since March 2023 and before that, Jun 2020. And the prior 54k was revised down to -3k, so the first back-to-back drops since the pandemic. We touch more on this below. 

US Treasury Secretary Scott Bessent told reporters, “anyone purchasing Russian energy is subsidizing attacks on the Ukrainian people,” per Reuters. Bessent’s comment comes as the US appears to be edging towards imposing new penalties on Russia, and the Trump administration weighs up selling Ukraine long-range Tomahawk missiles. 

• Earlier today, US Defense Secretary Pete Hegseth said at the NATO defence ministerial meeting in Brussels, “If this war does not end, if there is no path to peace in the short term, then the United States, along with our allies, will take the steps necessary to impose costs on Russia for its continued aggression.”
• US Ambassador to NATO Matthew Whitaker told La Repubblica yesterday, “Tomorrow, the US will make an important announcement regarding arms supplies to Ukraine… There are almost—I don’t want to say unlimited possibilities—but certainly there are many consequences for not reaching a peace agreement that could be used against the Russians.”
• Politico reports that Senate Majority Leader John Thune (R-SD) “left the door open Tuesday to voting on a long-stalled Russia sanctions bill as soon as this month. He didn’t commit to putting it on the floor — noting he still has to coordinate strategy with the White House — but said he believes the issue is ‘pretty ripe.’”
• US Senators are also working to set up a bipartisan meeting with Ukrainian President Volodymyr Zelenskyy alongside his White House meeting with Trump on Friday.