>> from no, this is bloomberg right now.

the latest payrolls report sending treasury yields surging with the fed's in connection move. traders pricing out 50 basis point move in november. we have,side surprise in payroll. >> thisis across. these numbers are pretty staggering. >> if you take these numbers at face value it is a strong labor market. >> it has so much attention focused only it. >> it is good news here. >> for the fed it means push back were harder to put but the single mandate box. >> this is night as tight as the fed thinks it is. >> we have seen a repricing of

the market. the idea of 50 basis points is reduced. jerks that is probably off the table. i think the next one will be relevance person. >> it is in the me sake of the jobs data. now the concern is no landing. probably somewhere in between. >> i want it honor in on the tremendous volatility in the 10-year yield. on october 1 with respect below the 3.7 but we've risen so far so fast and now flirting with 4% and this is as traders reprice about fed rate cuts after we saw such strong check data in the job market. even without this 50 basis point cut -- or with it that was earlier but priced out of the next move investors looking

forward to practices a mistake made about i the -- made by the fed they have said they have boxed themselves i hope they are not trapped the way they were in 2021. g.d.p. before trend, credit very tight and gold new high where is the restriction. michael key had this to say. >> this jobs number and the report is a superb report you cannot ask for a better report for the economy as a central bank. you don't want to react too much to one month's report. if we get more reports like this, as i say, i think we should have more confidence that we're settling in at the landing

spot we want from a dual mandate perspective. >> joining us now even if both of you believe that 50 was necessary in the last meeting we are looking at fed swaps and you have traders pricing in less than 25 basis point cut the next meeting pretty remarkable. what does this recalibration mean for you, robert on the path ahead? >> i don't think the fed has boxed themselves in. i think that they kicked off with a 50 basis point move. it was justified for the data they had. they are in restrictive territory. that gives them the latitude to be more cautious and as we see with the data yesterday, today,

the day before, there's been improvement. so this gives them the time to witness. if it is low inflation numbers they can keep cutting to sustain this outcome with the economy. this is with they want is a stable unemployment or fallingen employment rate. they don't want it rising. just a few months ago and a few months there was a risingen employment rate. at that point they looked like they needed to get it from going up to going down so that check after of 50 basis points made sense. now they have the flexibility to reevaluate and reschedule rate they can do it. they don't need to do it right now. >> gene, how did you feel the fed will manufacture you have them pricing in pretty much 25 basis points at the in connection two which would by you # for the rest of the year.

is that justified? >> i do think that is justified. we can see the cutting cycle is not over but he fed doesn't have to be in a hurry. if we look at total growth in nun farm payroll in 2021 and good it was at or above 4% which was a very row best total. that slowed to 2% in 2023 and over the last 12 months about 1 1.5%. so the theme of a slowing market is intact in these data but we don't see a recession starting in september. >> there remains to be a question of how hot this data kim in. the highest estimate for the payroll report was 220,000. we are 30,000 above this.

robert, how much the beat was annual wages came in above expectation are parts of the economy running too hot for with was expected and what is factored in? >> there are a lot of moving parts. the household survey has been showing strong growth in the labor force and it was not keeping pace. that household survey is very volatilitile so they will have to have a few more months to see the unemployment rate is going town. the numerator in that is taking into account the growth in the labor force and there have been changes in the immigration dynamics. if you have a slower growth rate in the lab force, you will be looking for a target of a slower

rate of job growth it keep things in balance. also this is a good report. you saw the reversal of some friends that were concerning in prior months notably the rising unemployment raid from the housing survey is i don't think being tack from the value suggesting the fed may be on course for a food landing. >> gene, how do you feel about the strength of the report but i want to double down on the wage report because not only were they better than expected in terms of growth rate of wages but you had that kind of moving forward the issues around the sport strike and higher wedges embedded in those discussions between the union and employers. does that all mean there is risk at the end of the day?

>> i think there is certainly risk but zooming out at the bigger picture of wing growth this continues it moderate and broader measures of inflation show that we are normalizing back to a level of growth and inflation that is very similar to where we were pre-covid so if we're close to 4% unemployment and close to 2% inflation that is close to a 2017 and 2019 economy. but the short term is 300 basis points higher. if we look at their message at the think in an economy with those longer term economic variables it is closer to 3%. that is why we are on this cutting path. they are trying to sustain this. not that they want to change the sustain but sustain the economy. i think that is the right path. whether or not there's a

recession is another argument. i think wing growth narrowly in a 3 to 4% type range is consistent with overall inflation. >> where do you think the neutral rate is, robert that comes back to the surface after you saw today and see the whole market recalendar braiding. >> i'm almost going toing about off on this because i think the spwral banks have a lot of leeway where they establish their idea of neutral and it will find a he can lebanon rum this makes sense -- equilibrium. i think that spwrapl banks prior it covid ran rates were lower than they needed to and that risk creates imbahamas and that is always a risk going forward.

i think that we are in a different situation than before covid. it is true earnings are not far from what they are. the e.c.i. is up, employment cost index and workers have lost a lot of real purchasing power and prices are high and the inflation measures may be understating the agree of inflation people have interned. so i think the fed will need to be with respectful of a miniature reply of the 1970's. this is what happened in the sense there was an oil price shot that we had in covid on the up side high inflation, aggressive central bank which we had with the 1973 oil shock and the fed began it cut. that is where we're now and in europe. if you have an acceleration in

growth or a shock in network prices that pushes inflation it a high level you will have workers works looking to tpweut higher wages. so we are in a great spot and in a ball market for bonds, i think there will be two-way risk. it won't be easy call and even that needs to be watched for given the middle east and firmness in the economy. >> we're searching for that neutral rate is soul searching. thank you very much for your time and on a complicated day of jobs unless and a lot of changes. up next, the auction block and companies sold over 600 billion of bonds last month and that is the most for a september on record. we will talk about credit markets next.

>> this is bloomberg "real yield." we wrapped up a record month for bond sales we saw firms lead the way with sales the total fell short of norse with only $16 billion. with hey grade forecast for october we expect a big slowdown from the 170 billion sold in september but sales expected it be strong topping the average of the last six years and leading it the busiest month in three years. october has gotten off to a

solid start with the total exceeding all of october of 2022. tony rodrigues spoke this week about the fundamentals. >> we are seeing the equity expense in the credit markets is emerging markets are doing well. high yields doing we will so credit rick is highly value and fundamentals are very solid, defaults are low. you are seeing the same in the fixed income but it is focused on the credit sectors. >> maureen, maybe after we have gotten more information gives a recalibration on how they are thinking of tapping the market after the job reports and rates higher. >> when you think from an investor perspective we're at a month where good news is good

news for credit markets. as rates sell off it should be credited to spreads and they are tightening annual we're done it two-year and close it decade highs. the question is hutch further we can run from here but the story is elevated yields have supported lofty evaluations in credit markets and it is likely it continue. you see the cost of didn't rise but beeper in the high 4's in 10-year yields so we are off the peak and we've some things that need to be addressed so it will right hand hesitate pott. >> mike, i want to get back to that idea of higher rates or higher than the market expect the. tack one example an airline

saying that they are having issuers reach an agreement with creditors and it is interesting to see such large circumstances reach ahead. i wonder what your view is when you see high grade weaker borrowers. if rates stay this level or marginally lower through the end of the year will we see more stress? >> it is a great question and i think by and large with we have looked at in the more stress part is the same companies that were having problems two years ago in 2022 and you could look forward it say rate heights would be bad for them is still the same cohort of people. there was an airline today they have been having problems and trying to merge to find a dance partner so to speak 30 move that company forward. but ultimately at the manage ma

they were pricing in 250 and now we're lower than that in terms of the number of rate cuts it is on the margin that helps a couple borrowers that haven't grown into their capital structure but we think the default cycle will be longer and last one or two years to clean out a lot of the transactions that handled in 2021 and early 2022. >> that is spirit airlines and it would be forced into bankruptcy without a deal and if you are worried about a longer default cycle or bankruptcies how much flocking to safety did you sigh, maureen? will that push spreads tighter? >> you can argue that investment grade is a little cheap it high yield given the come press beaver seen across the asset classes.

if anything stronger economic conditions argue for the opposite. you see more compression. but we have seen risks tick up when you think of the situations playing out in semiconductor space and autos so there's scenarios percolating it the surface in this higher for longer environment. but ultimately i think this master means more compression in the near term then as we flirt with stronger economic head winds then you see more flight to quality. >> we have had investor confident investor spreads are going to wide and we see such strong data. with spreads as compressed as they are and further compressed why buy? >> it is a great question and one a lot of investors ask us around hear on the high yield

bond market in particular. i think if you look become historically when the fed enters a rate cutting cycle and the expectation is not for a recession within the next year spreads 10 it compress and certainly do not widen. most of the economic scenarios the last 20 years if which spreads widened in the face of a fey sort of cutting cycle it was because of obvious events that with cause a recession, 2020 with covid rate cutting with it was was to stave off the recession that was well firsted. we degree into compression or flat rates for in the spreads will probably be the base case for us. >> how is the maturity wall for you, maureen? what does it mean for the supply

that will come to the market? >> we have two big maturity years, 2025 about $850 billion and $2026 close to a trillion. some of the 2025 has already been addressed. part of the stats techniques are skewed that they have pre-funded some didn't but cash is earning a lot of yield but we've big towers because the market grew after covid. 2020 and 2021 were big in if i have-year paper so it grew after covid. i think in all likelihood they will continue to be large and the question is you look at the vintage of the coupons they are low is the incentive it particular tell out dissipates system. but issuers have gotten their arms arnold we're not heading back to a 2% 10-year and when

you see spreads tight and you get a little relief you pull this forward. >> that trillion dollar maturity wall in 2020 what is that made of? >> it is about 50-50 corporate and financial, a lot of five-year people issued in 2021 is low cue opinion debt but the construct looks similar to supply-wise now i don't think the market will have trouble digesting that. >> inversors have been wicket for that. a trillion is stunning it think of. thank you both and happy friday and heap weekend. still ahead a fresh read on u.s. this is "real yield" on bloomberg.

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>> this is "real yield" and time for the final spread. what we have monday is more fed with hearing from jpmorgan c.e.o. on tuesday and more fed speak and wednesday the latest fomc minutes. we will see how this changes the calculus. and we speak to the security leaders at the macro forum in new york city. much more people to weigh in on the fed rate cuts. jobless claims in the pipeline and the new york fed president and more data on friday. big banks kicking off earnings. we will get results from jpmorgan and wells fargo. see if they hold on to that.

and well see the final c.p.i. because you speck the challenging of the date the year over year is 2.3%. from new york that is it. same time, same place next week. this is "real yield" on bloomberg. ahhhhhh business license guidance? ahhhhhh -cross-border sales? -ahhhhhh -item classification? -ahhhhhh does it connect with acc...? ahhhhhh ahhhhhh ahhhhhh ♪ ♪

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>> welcome to bloomberg markets. u.s. markets reacted to strong jobs data. you have the s&p 500 just above .1 -- .3%. if you see that indexes up by up by more than 1%. we also have the dollar index strengthening. it was only last week that the dollar interest -- index was at a dollar and change. nymex