>> This is the process that you're gonna go through.>> The latest US employment report adding to the sharp pains being felt this week in the bond market. The US jobless rate dropped to 3.7%. You have to go back 49 years for a rate that low. I'm Conway Gittens in New York.
Even though hiring slowed significantly in the month of September, only 134,000 new jobs were created. The Labor Department said that slowdown was due mainly to the impact of Hurricane Florence. So if you add in strong upper revisions to the hiring in July and August, you still have a labor market that is flexing its muscles.
But as the labor market continues to tighten, wage growth is still being constrained. Average hourly earnings rose by only $0.08 last month, bringing the average year over year pay raise to $0.73. Taken in its totality, the employment report is the latest sign of an economy that's continuing to grow without sparking rampant inflation.
That's a scenario welcomed by Federal Reserve looking to hike rates one more time this year and three more times next year. The bond market finally waking up and taking notice. There's been a massive exodus out of US government debt this week, pushing interest rates to multiyear highs. A stronger economy is prompting investors to run away from government bonds in favor of riskier investments that pay better.
The selling, so severe that some investors think a 30 year bet favoring government debt may be shifting the opposite direction.