The annual benchmark revision to establishment survey payrolls removed 141,000 jobs from the March-through-June period, roughly double the consensus estimate among primary dealers.
The two-year note fell eleven basis points within the hour. The ten-year followed with less conviction, steepening the curve modestly — a move consistent with a market pricing more near-term easing without changing its view of the terminal rate.
Revisions of this size are not unusual and are not news in themselves. What moved the curve was the composition. The downward revision concentrated in leisure, hospitality and temporary help, the three categories that have historically turned first, and it arrived alongside a household survey that had already been softer than the establishment series for three consecutive months.
That divergence has been the central puzzle of the past two quarters. Economists who argued the household survey was closer to the truth now have a data point. Economists who argued the opposite have a smaller sample to work with.
Fed officials have said little. The chair’s prepared remarks on Thursday were written before the release and were not amended.