TLT Price Wobbly After Powell, JOLTS

TLT Price Wobbly After Powell, JOLTS

Bond investors seek direction from Fed, economic data.

kent
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Research Lead
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Reviewed by: etf.com Staff
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Edited by: Ron Day

A day after Treasury yields spiked on inflation worries, bond investors found little reassurance from a Powell speech or freshly released jobs data. 

The rate-sensitive bond market proxy, iShares 20+ Year Treasury Bond ETF (TLT), reversed, falling after what had been a gain of nearly 1% to start the trading day Tuesday. The early jump in TLT’s price followed Jerome Powell’s speech at a European Central Bank event, where the U.S. Federal Reserve chair said that the latest economic data are showing signs of cooling inflation. 

By late morning, TLT had given back half of its early gains as investors continued to digest economic data and looked toward the highly anticipated Fed jobs report due Friday morning. 

The May Job Openings and Labor Turnover Summary (JOLTS), released shortly after Powell’s dovish comments, gave bond investors reason to reign in their renewed enthusiasm as the survey showed that the labor market strengthened.  

The number of job openings rose to 8.1 million, which is stronger than the 7.9 million job openings in April. 

The JOLTS quits rate, which generally measures voluntary separations initiated by the employee, held steady at 2.2% in May, marking the seventh month in a row at this level. 

What Does the JOLTS ‘Quits Rate’ Mean for Markets?

The JOLTS quits rate, issued by the Bureau of Labor and Statistics, serves as a measure of workers’ willingness or ability to leave jobs. The JOLTS quits rate tells (or may tell) an investor a few things about the labor market and potentially the overall economy: 

  • Employee confidence: A high quits rate can indicate that workers are feeling confident about their job prospects and are more willing to leave their current jobs for better opportunities. This may be interpreted as a sign of a strong labor market, which can be positive for some companies (those that can attract and retain talent) but also indicates potential wage pressures. 
  • Wage growth: When workers are quitting at a high rate, it can put pressure on companies to raise wages to attract and retain talent. This can be positive for workers but can also eat into corporate profits. 
  • Turnover: A high quits rate can also indicate higher turnover, which can be disruptive to businesses. Investors may be concerned about companies that are struggling to retain employees. 

In reflection of 2024’s JOLTS reports, the flat quits rate trend does not indicate a confident U.S. employee, but it does not indicate a lack of confidence, either. This leaves the near-term outlook for Treasury yields and prices uncertain, as the job market is showing signs of moderate strength and could turn in any direction in the coming months. 

Kent Thune is Research Lead for etf.com, focusing on educational content, thought leadership, content management and search engine optimization. Before joining etf.com, he wrote for numerous investment websites, including Seeking Alpha and Kiplinger. 

 

Kent holds a Master of Business Administration (MBA) degree and is a practicing Certified Financial Planner (CFP®) with 25 years of experience managing investments, guiding clients through some of the worst economic and market environments in U.S. history. He has also served as an adjunct professor, teaching classes for The College of Charleston and Trident Technical College on the topics of retirement planning, business finance, and entrepreneurship. 

 

Kent founded a registered investment advisory firm in 2006 and is based in Hilton Head Island, SC, where he lives with his wife and two sons. Outside of work, Kent enjoys spending time with his family, playing guitar, and working on his philosophy book, which he plans to publish in the coming year.