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Good morning everyone, Scarlet fo In, Tim Keene and A Scarlett who predicted it didn't come in. But there is the first print of this preliminary number, and it is toward what we heard from doctor Englander. Scarlett. I'm going to suggest a negative nine to one one is a wow statistic. We begin strong in the special edition of Bloomberg Surveillance with Ira Jersey of Bloomberg Intelligence. Ira, I guess we see an economic statistic three hundred thousand or
so off the mark. What does it mean for a bond market to see our labor so beleaguered?
Well, I think the You know that these revisions are very hard to forecast, I mean by definition, because they cover such a long period of time, and you know, but the fact that we had even slower employment growth than we thought and had forecasted, clearly the market took that as bad for the economy, and that's the reason why you saw bond yields go from up a little bit in the front end to flat to maybe a
little bit a little bit lower in the front end. Importantly, I think here it just shows that, you know, the Federal Reserve has to take this into consideration when they deliberate next week what to do with interest rates. And it just solidifies even more that they're going to cut
next week. And I suspect that it might actually give some of the people are on the fence about the timing of cuts to not only cut in September, but also do a string of cuts and cut again in October, December, and January as well.
To your point about how it's very difficult to forecast this. In a survey of economists that Bloomberg has compiled, the lowest estimate for this revision was nine hundred thousand, and the actual number reported was nine hundred and eleven thousand reduction in the number of jobs over the twelve months to March twenty twenty five. So we had expected a
negative revision, perhaps not this sizeable. How much of this was totally baked in to the point where a fifty basis point raycut is something that is now becoming more of the default scenario.
Yeah, well, you know, I don't think that the Fed's going to go fifty, and the market's not fully priced for that, not even fifty percent price for a fifty basis point raycut. At least it wasn't when I walked in here. I haven't checked in the last two minutes, but I doubt that it's really changed. And one of the big reasons for that is there still is this inflation overhang, right, the fear about tariffs may be still adding to some inflation. We haven't seen all of it.
You've heard a.
Lot of Fed speakers talk about the net effect of tariffs hasn't yet been seen. So I think the Federal Reserve wants to be cautious, right, and the idea that they don't have to go at every meeting. I think that's what this takes off the table that unless you see a you know, insanely low CPI print, and you know, tomorrow's PPI winds up being very low as well, at least below consensus, then the Federal Reserve probably just does
their twenty five. Then they guide, right, and it's that guidance I think that will ultimately move the bond market and does that guide and say, hey, we're going to cut you know, one hundred and fifty hundred and twenty five fifty basis points. Maybe that's where the updated dot plots going to matter, as well as their general summary of economic projection.
In terms of the reaction in markets, I mentioned how the tier yield the tenure yield went negative briefly, but they're back up again, and we're now seeing the two year yield higher by one point eight basis points, tenure yield four point zero six percent up higher by two point two basis points. What do you see in terms of the direction of yields Because a lot of people were saying that this revision would be would unlock the trajectory for yields for the rest of the year.
Was that asking too much imports on it? Yeah?
I think so, I don't see that. You know, ultimately, the market's trying to be forward looking, right, and these these are revisions to pass data not and don't necessarily reflect how the economy is going to do over the next three to twelve months, right, And and that's but but it does show the trend, and I think that that's important, and that trend maybe is a little bit more severe than we thought. So that's where I think a twenty five basis point move is kind of your
base case. And then and then you know how what's the follow on from that? Uh, that base case for the long end of the curve. And you know, I think that we are a little bit overbought. You know, we we have rallied very far, very quickly, so it wouldn't surprise me if we can solidate it a little bit here. I think, Tom, you asked if we were going to see sub four percent. Yeah, you know, we've
had We've had this since February. We've had our forecast for year end has been three point ninety five percent or thereabouts on the ten year field. So we're effectively there.
Special edition and extended edition, I should say, a bloom Surveillance Scarlett Foo and Paul Sweeney and Bloomberg Intelligence will pick that up at near a quarter after the hour, right now, Scarlet fuh in time key for you and without commercial interruption across the nation efforting a number of voices here will stay with Ira Jersey and move on to other conversations. In a moment, I'm going to ask
you and all our guests this question. Is a simplistic way to look at this is to take nine to eleven and divide up by twelve, and we take seventy six thousand jobs off non farm payrolls looking back twelve months.
Yeah, that's basically what you do. I mean, obviously it's not going to be as linear as that, but sure, effectively, what you're saying is seventy five thousand dollars seventy five thousand less jobs per month were created, and that doesn't paint a rosy picture for the economy at the moment. So, you know, now some people are suggesting that perhaps this is the low and that will wind up seeing some hiring.
Not as convinced of that. When you look at you know, the NFIB survey and a lot of the other sentiment surveys around the corporate world, it does seem that people are kind of pausing their hiring plans. So if you, you know, if no one's being hired and you have still have layoffs, then the hurdle to get positive payroll growth is that's even that much higher.
Ira, Thank you so much, Ira Jersey with Bloomberg Intelligence. I stopped by Michael McKee's desk this morning. I had to fight through his people got through, and I said to him, is there a whisper number on preliminary benchmark payroll revision joining us. Now, Michael McKee, you said there was no whisper number. There's no whisper I'm surprised by negative nine to eleven. That's a lot of jobs.
I think we're surprised by the amount, but the fact that it was going to be a big number wasn't a surprise to most people. The range in the Bloomberg survey was from two hundred thousand to nine hundred thousand, and there were people who were even suggesting a million, and so that's not a surprise. But remember what you have to do is take this go back to March. One hundred fifty nine million, two hundred and fifty thousand jobs were what the BLS had counted on payrolls as
of March of this year. Now you subtract nine hundred and eleven thousand from that in March, and that's where you are. So this is really backward looking data. It's it's a way to update the data with actual data rather than a survey. And it does show that the economy was weaker than we thought, but it doesn't have a lot of implications going forward.
Okay, I'm going to ask a really obvious question. For people who don't watch or listen.
Watching, I'm competing with you on that.
But for folks who don't monitor every single job support or every weekly jobless claims, people like that, well maybe those who don't listen to Bloomberg Radio, but you know, for my mother who might tune in, how come the government can't get it right the first time around? Why would there be such a large revision, negative nine hundred eleven thousand jobs over a twelve month period.
Well, the sign of the revision is maybe a bit of a surprise, but the fact that they are revised, that happens every year, and it's hundreds of thousands in either direction. Because what the BLS does is take a survey every year or every month. They survey one hundred and sixty one thousand establishments around the country, which is about they say they account for about thirty three percent
of all payrolls temple. And this is the once a year data that they use when they get it in unemployment insurance taxes paid by companies, so they can see how many people actually are on payrolls, and that is about ninety eight percent of all jobs. So this is a much more accurate thing, but the numbers don't come out at the same time. The surveys the best they can do. In the meantime, NERD.
Fast and Extended edition of Bloomberg Surveillant Scarlett Foh and time Key with you. Bloomberg Intelligence coming up here in eight or nine. I mean, it's Stephanie. We're authentic. We'll get to her in a moment. Going to ask Stephanie this question because that would be rude, So I'll ask you the rude of question. The President is going to respond to this, Does he say these were Biden jobs that were lost?
Well, one would assume politically that would be the move for him, but there has been some sort of feeling that out there that what he's going to do is use this to attack BLS because he's already started that and say how could you be that wrong? And we need to basically fire y'all and start over again or something like that. So we're waiting to see how he responds, but don't know yet.
Malcael McKee, thank if someone stoving all of our economic coverage truly knowledgeable on these arcane economic moments joining us now Stephanie Roth kind enough to be with us in the last forty eight hours, chief economist at Wolf Researched. Stephanie, I guess it's a surprise to a worser number from this preliminary statistic to the actual statistic. Can there be more mystery?
Yeah? I mean the thing is last year there was a bigger initial preliminary than the actual, so eighteen versus the actual of five to eighty nine. So I think markets are just recognizing that we knew that there was going to be a large revision and it might not be ultimately as large when we get the actual in early twenty twenty six.
Stephanie, what would you be listening for, watching for when the president does eventually respond. As we've been noting, the period covers the end of the Biden administration and the very beginning of the Trump administration, and the President will be quick to say that it is all Joe Biden's fault.
Yeah, I mean, I think that's probably right, and perhaps, as Mike McKee was saying earlier, it's perhaps more of just an attack on BLS and not getting the numbers right. Granted, this is a really difficult thing to estimate. In real time and BLS does their best buy having a survey that doesn't represent the full sample. So once they incorporate all the data from the unemployment insurance records, then they
can get the full picture. And it's not always exactly right, but what we have seen is the preliminary is larger, shows a large revision in recent years in the actual.
Sephonie wrongs with us and we will continue with ms Roth of Wolf Research News. Intrudes oil is surged up one dollar, up one point five percent on Brent crude, sixty six point five eight on Brent crude gold elevated fifteen dollars. Our top Live team, thank you Paul Wallace for your leadership in the Middle East. Israel strike and cutter.
This attack and cutter is unprecedented. It's difficult to overstate how angry it could make the leadership in Doha as well as other Gulf states such as Saudi Arabia and the UAE. And to go over to the headlines, this is just breaking now in terms of actual headlines and not speculation. And the headline is simply Israel targets Amas leadership in strikes on Katari capital. That from our Paul Wallace and Alisa Odenheimer as well. Scarlett Foo was Stephanie Roth.
So let's follow up on that headline.
With oil prices now rising and you see WTI, for instance, up one and a half percent, Brent crued up one and a half percent as well, we're talking about approaching a high sixty dollars range at some point.
What does that mean for the inflation picture, Stephanie.
We get CPI and PPI this week and all focus will be on that. But down the road, if this war has revived and this becomes a constant pressure point, how are you folding that into your analysis of inflation?
Yeah, I mean there does continue to be more inflation pressures than generally expected. So oil prices tend to look at a little bit differently, and that's why the said
looks at core, which excludes good and energy. But when we're thinking about the broadways inflation picture, we are worried that inflation pressures are going to pick up in the next couple months because by our estimates, we only we see about thirty five to forty percent of the tear of pastor has already happened, in which case a lot of it is ahead of US, and it might just look like a number of prints where core inflation is running in AO point three towo point three five percent range,
which just poses a challenge. So the energy pricesdent and of itself means it's a little bit less important, but the broad inflation picture is a bit challenge in the next couple of months.
Stephanie, thank you so much.