Labor Supply Versus Labor Demand
Tracks whether weakening payrolls reflect workers leaving the labor force or employers cutting demand, since the two imply opposite inflation and policy paths.
September 5 update: the month that was supposed to identify this produced neither signal. August payrolls rose 162,000 with unemployment unchanged at 4.1% and July job openings at 7.3 million, so the July pairing of a 264,000 labor-force decline against a negative payroll print did not repeat, and JOLTS stayed inside the little-changed range that has held all summer. The market read it the same way: the 2-year ended the week exactly where it began at 4.34% after touching a 252-session-high 4.39%, so nothing in the front end treated the release as a demand break. Next check: a payroll print under 75,000 with the 2-year below 4.20% raises this; two further months where labor-force change and payroll change point the same way, with prime-age participation confirming, is still the only clean identification. August 12 update: July produced both signals in the same month, a 264,000 labor-force decline beside a -23,000 payroll print, unemployment at 4.1%, and June JOLTS openings, hires, quits, and layoffs all little changed. If the marginal worker is leaving, payroll weakness is not disinflationary and wages stay firm; if demand is breaking, the front-end rally to 2Y 4.25% is justified. No standing theme resolves this cleanly: the rates row treats labor as an inflation input and the demographic material treats participation as a 2030s fiscal problem, while the live question is identification.
What would move it
▲ Raise
- Two further months where labor-force change and payroll change point the same way, with prime-age participation confirming.
- JOLTS layoffs or quits break out of the little-changed range, identifying a demand break.
- Wage growth stays firm as payrolls weaken, which points to supply exit rather than demand loss.
▼ Lower
- Payroll revisions turn positive and the labor-force decline reverses.
- Unemployment and participation rise together, which identifies demand weakness directly and returns the question to the rates row.
Conviction over time
Event timeline
- measured October 7, 2026
Bull steepening: Short-term Treasury yields fell faster than long-term ones: the market is pricing in rate cuts. (2Y -11bp in five sessions, 2s10s +10bp in five sessions)
- measured October 6, 2026
Bull steepening: Short-term Treasury yields fell faster than long-term ones: the market is pricing in rate cuts. (2Y -10bp in five sessions, 2s10s +11bp in five sessions)
- measured September 28, 2026
2Y Yield 4.87% (2026-09-24): the highest close in a year.
- measured September 27, 2026
2Y Yield 4.87% (2026-09-24): the highest close in a year.
- measured September 26, 2026
2Y Yield 4.87% (2026-09-24): the highest close in a year.
- measured September 17, 2026
Bear flattening: Short-term Treasury yields rose faster than long-term ones: the market is repricing the next few Fed meetings, not long-run inflation. (2Y +28bp in five sessions, 2s10s -13bp in five sessions)
- measured September 17, 2026
2Y Yield 4.67% (2026-09-15): the highest close in a year.
- measured September 16, 2026
Bear flattening: Short-term Treasury yields rose faster than long-term ones: the market is repricing the next few Fed meetings, not long-run inflation. (2Y +28bp in five sessions, 2s10s -8bp in five sessions)
- measured September 16, 2026
2Y Yield 4.65% (2026-09-14): the highest close in a year.
- measured September 15, 2026
Bear flattening: Short-term Treasury yields rose faster than long-term ones: the market is repricing the next few Fed meetings, not long-run inflation. (2Y +29bp in five sessions, 2s10s -9bp in five sessions)
- measured September 15, 2026
2Y Yield 4.63% (2026-09-11): the highest close in a year.
- measured September 14, 2026
Bear flattening: Short-term Treasury yields rose faster than long-term ones: the market is repricing the next few Fed meetings, not long-run inflation. (2Y +17bp in five sessions, 2s10s -10bp in five sessions)
- measured September 14, 2026
2Y Yield 4.56% (2026-09-10): the highest close in a year.
- measured September 12, 2026
Bear flattening: Short-term Treasury yields rose faster than long-term ones: the market is repricing the next few Fed meetings, not long-run inflation. (2Y +17bp in five sessions, 2s10s -10bp in five sessions)
- measured September 12, 2026
2Y Yield 4.56% (2026-09-10): the highest close in a year.
- measured September 11, 2026
2Y Yield 4.43% (2026-09-09): the highest close in a year.
- measured September 10, 2026
2Y Yield 4.39% (2026-09-08): the highest close in a year.
- raise August 24, 2026
Evidence: Canada unveiled $20 billion of counter-tariffs mirroring the US levy, opening a two-way duty fight with the largest US trading partner.
- candidate August 19, 2026
Evidence: Copper fell 2.16% to $6.46 a pound and made a new monthly low after three failed runs at January’s $6.765 high and two failed London auctions this month, while gold miners rose 3.20% on the same week.
Related claims
| Opened | Claim | Status |
|---|---|---|
| October 14, 2026 | U.S. CPI 2026-10-14 printed hot versus the Cleveland Fed nowcast; the map said 2Y Yield up on the day (settled on the release-day move in stored daily closes). | awaiting outcome |
| September 14, 2026 | U.S. PPI 2026-09-14 printed hot versus a fixed threshold; the map said 2Y Yield up on the day (settled on the release-day move in stored daily closes). | correct |
| September 10, 2026 | U.S. PPI 2026-09-10 printed hot versus a fixed threshold; the map said 2Y Yield up on the day (settled on the release-day move in stored daily closes). | correct |
| August 12, 2026 | U.S. CPI 2026-08-12 printed cool; the map said 2Y Yield down on the day (settled on the release-day move in stored daily closes). | correct |