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[MORNING CALL:] Lower Sooner?

Higher for longer may just have turned into lower sooner. Private payroll data from ADP, for what it s worth, showed hiring slowed to 152k jobs last month, far below what the 175k Street had been expecting. The data is the latest sign of weakness in the labor market that investors hope will give the Fed enough evidence to cut interest rates sooner rather than later. We ll get another indication this morning with the release of the weekly jobless claims (220k).

In addition, the ISM services index showed that 53.8% of purchase managers surveyed reported expansion, up from 49.4% in April and better than the estimate of 50.7%. It s no coincidence that, according to the ADP report, nearly all the hiring last month came from the services sector.

That gave the broader markets something to hang their hat on as we wait for Friday s jobs number (185k), with the Dow closing 96 points higher, while the S&P500 registered a 1.18% gain, enough to set a new closing record, and the Nasdaq, or should we start calling it the Nvidia index closed 1.96%. higher, also closing at a new all-time high. Speaking of Nvidia, the stock was up 4% yesterday to $1,219, at one point giving it a market cap of more than $3trln.

With renewed hopes of a rate cut sooner rather than later, traders in the Fed Funds futures market are now putting the odds of a rate cut come September at 57.4%, up from 42.1% a week ago. That has prompted a small number of economists to put two rate hikes back on the table. Yesterday, The Bank of Canada cut its interest rate by 25bp, its first cut in four years, and the first what is expected to be another in July. Speculation is that the European Central Bank will follow suit later this morning.

Treasuries extended their week-long rally, with the benchmark 10yr note going out 4.29%, a yield not seen since the last week of March, and lower by 22bp on the week, while the long bond closed at 4.44%, down 21bp since last Friday. The 2yr note saw its yield fall 4bp to close at 4.73%, 16bp lower on the week.

Corporate spreads widened for the second straight session to where the average high-grade bond is now trading 91bp over comparable Treasuries. I wouldn t get too alarmed since the widening is more a function of the rally in the drastic drop in yields this week as opposed to waning of interest in corporate bonds.

And that can be seen in the performance of this week s offerings. For the seventeenth week this year, syndicate desks around the Street underestimated the resolve of high-grade corporate borrowers to push their financings across the finish line. In a week that was only supposed to produce, on average, $25bln in new ex-SSA debt, seeing as how most of the Street s attention was drawn to the latest round of economic data, a total of 29 borrowers raised $26.175bln over a three-day span.

Seven more issuers, through 10 tranches (another floating rate note tranche was abandoned, bringing the total of drops for the year to 12), raised $7.15bln to go along with the $19.025bln priced over the last two days. That s not to say we re done for the week. On the contrary, barring a horrendous jobless claims number this morning, there are still a couple of companies who wound up investor calls earlier this week.