Treasurys Rally Even As Jobs Data Beats

Euro zone inflation rose for a fourth straight month, to a three-year high, driven by energy costs, according to Reuters and the Wall Street Journal on Nov. 4. The Journal said the reading reinforces expectations that the European Central Bank could raise its key interest rate again after holding it at its last meeting. The data provided does not give the headline rate or the ECB's meeting date.

The mechanism is the energy price chain that runs through the Iran war and European gas markets, covered on the Geopolitics desk. An ECB that hikes into energy-driven inflation is tightening against a supply shock, which puts weight on household demand. Industrial companies are partly insulated, as Continental and Fresenius both raised their outlooks the same day, but consumers carry the energy bill and cannot pass it on.

The Reserve Bank of Australia has raised interest rates to an 18-year high as inflation remains stubbornly elevated, according to FXEmpire on Nov. 4, even as the country's housing market slumps. The piece frames this as a monetary policy dilemma. Higher rates are working against a property sector that already shows weakness, but easing would risk entrenching inflation.

For the Australian dollar the tension cuts both ways: high rates support the currency, while housing weakness argues for the central bank to stop. The data provided does not say what the RBA will do next or give the cash rate. Energy-driven inflation globally, visible in the euro zone's three-year high, is the common thread that makes central banks reluctant to cut even when domestic demand softens.

The BLS reported Tuesday that September job openings rose by 333,000 to 7.523 million, above the 7.1 million forecast. Hiring and quits both increased and layoffs declined, which CNBC called mostly positive for the labour market ahead of payrolls. A rise in quits typically reflects workers' confidence that they can find another job, and a rise in hiring shows employers are filling positions rather than just advertising them.

That is a tighter labour market than the manufacturing survey suggests. ISM manufacturing employment slipped to 52.4 from 52.7 and missed the 53 forecast, though it remains above 50. The two readings reconcile if hiring is concentrated outside factories. For rate markets, a stronger labour market reduces the case for easing, which is why Tuesday night's Treasury rally reads as a flight to safety and not a bet on weaker data.

September factory orders rose 1.8% month on month against 1.2% expected and 0.3% prior, the largest beat in Tuesday's data. Durable goods orders excluding defence rose 2.3% against 2.2% expected, and excluding transportation 0.5%, exactly in line. The gap between the two durables readings shows that the strength came from aircraft and defence-adjacent categories rather than from broad-based capital equipment.

That matters for industrials, which led Tuesday's equity tape with a 1.66% gain. The excluding-transportation reading, which strips out volatile aircraft orders, is the cleaner guide to underlying demand, and it matched expectations. The Industrials rally therefore looks better supported by the headline factory orders number than by the core capital goods data. A 0.5% rise is solid, but it does not account for the sector's size of move on its own.