SPAIN AUCTION PREVIEW: On offer next week

FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 4.09% (+0.00), volume: $92B
• Daily Overnight Bank Funding Rate: 4.09% (+0.00), volume: $155B

While we take the magnitude of the drop in September's ADP payrolls with a grain of salt given the rebenchmarking impact on the overall sequential change, the data showed widespread weakness across multiple sectors. 

• Goods payrolls fell 3k for the first contraction in 4 months, with services down 28k, worst in 3 months and now marking a third drop in 4. Of 10 covered sectors, just three (natural resources +4k, info tech +3k, education and health +33k) were positive.
• The education and health gain was particularly interesting given a long streak of large underperformance vs the BLS series- it's now appearing to catch back up (see chart). But this is a non-cyclical sector so its recent improvement may flatter the broader perspective.
• Payrolls in leisure and hospitality a classic cyclical sector that was red hot during the pandemic reopening - were down for the first time since February 2024 (weakness that was echoed in the latest JOLTS data too), while construction employment is looking increasingly precarious with the first contraction since July 2021 in a sector beleaguered by weak activity.
• Large businesses continued to hire (+33k for companies with 500+ employees), but contractions were seen across the four categories of businesses sized smaller than that.
• The associated September Pay Insights also showed weakness outside of the raw number and it's unlikely to have been impacted by the numerical rebenchmarking. Job changers saw just 6.6% wage growth, joint-lowest since February 2021 (7.1% prior), led by "leisure and hospitality and financial activities", though for job stayers it ticked up 0.1pp to 4.5%.

RXX5 129/129.50cs, bought for 17 in 5k and 15 in 12k, looking at volumes close to 20k have been done.