Imagine being handed a backpack, a pair of hiking boots, and a couple freeze dried food pouches, then told you’ve just joined an expedition to climb Mount Everest… Except, there’s no compass, no tent, and no bear spray…. That’s us right now.
We’re bushwacking our way through an unsolicited economic experiment, with no clear sight of base camp. And the longer this shutdown drags on, the lower our visibility becomes. The only thing keeping us from traversing off the side of this cliff are provisional data points…just enough to distinguish up from down.
Take yesterday’s alternative employment report from a firm called “Challenger, Gray & Christmas” …*pause for peculiar name reflection*… The release showed 153,000 job cuts last month, nearly triple the number from the same period last year. That marks a two-decade low in labor market stability, as AI reshapes industries and cost-cutting accelerates.
The market responded favorably to the weaker data: stocks sold off, yields dropped, and treasuries rallied. But next week, we face another mountain…supply.
On the docket:
$58 billion in 3-year notes (Monday)
$42 billion in 10-year notes (Wednesday)
$25 billion in 30-year bonds (Thursday)
Plus, $40 billion in U.S. high-grade corporate issuance expected
That’s a heavy load for the market to absorb. As mentioned in prior writeups, this added supply will likely pressure treasuries. If demand holds, we may retain recent improvements. But if investors shy away from these auctions, it could be another domino tipping yields higher.
The tension between “up” and “down” is palpable. Directionally, things remain elusive. Which makes the resolve to reach the apex of this climb all the more meaningful. After all, the motivation to scale the most jagged rock faces often stems from something simple: the view.
But the view isn’t just about beauty, it’s about clarity. It’s about seeing in all directions, choosing a path toward safety, and moving with intention, not just momentum (knee-jerk)… Aren’t we all searching for that right now?
The thing about mountain climbing is the hardest leg of the expedition is the assent… but the payoff is worth it… So keep those boot laces tight, watch your footing, and keep your eyes on the horizon… “Belay on!!!”
10yr: Speaking of view, I’m changing mine… redrew the downward trend channel to capture a broader timeline… Support would be pegged right around 4.15%-4.17%.