Good Thursday AM,

Bonds are up slightly on the day which is a bit of a surprise given this week’s Jobless Claims. The market was looking for 350k new claims and only 310k were reported. This is a pandemic low. Are people finally getting ready to go back to work? Too soon to say and at this point the market’s reaction leads me to believe that this week’s number may not be sustainable. We did have an outstanding 10-yr bond auction yesterday, which is certainly helping. From a pure technical picture, I believe we will continue to inch our way up to the top of the trading range, which is now about 20 bps away. The caveat is that tomorrow we will get a look at last month’s PPI and if this comes in hot, bonds may fall under pressure.

The European Central Bank (ECB) was widely expected to do “something” to tighten up its PEPP (Pandemic Emergency Purchase Program) in today’s policy announcement, but they’ve executed it in such a way as to trick bonds into viewing it as good news.  EU bonds are having one of their best mornings in weeks–something we might expect to spill over to the US bond market, but that correlation has been imperfect so far as Treasuries still have some anxiety over the looming 30-yr bonds auction and ongoing glut of corporate debt issuance.

On the employment picture, the number of job openings in the U.S. hit a fresh record at the end of July. The Labor Department said there were 10.9 million unfilled jobs that month, exceeding the 8.7 million Americans who were unemployed and seeking work during the same period. MORE JOBS THAN PEOPLE LOOKING. The number of people who voluntarily left a job in July was the second highest on record. Does anyone else see this as insane?

More to share but after yesterday’s volume of War and Peace, I am leaving it here.

Please remain safe and healthy, make today great!