US macro

US economic data steps faintly in the direction of “soft landing” with last week’s AHE & jobs print.

315K with increasing LFPR (labour force participation rate) is a good combination; more labour supply equals less inflation, one hopes, against a backdrop of robust employment gains, which equals lower odds of a recession.

Also, prior months’ non-farm payrolls data was revised down, meaning they aren’t quite as worryingly strong as first thought (meaning that harsher rates were needed).

History is not on the side of soft landings. Almost every rate cycle ends in recession, and the interplay of rates and oil makes for a grim outlook.

Equally, the Fed is neither inexperienced nor unwise, and data like the above increases the odds of this happy outcome at the margin.

We file it under the “good reasons to be bullish”, allocating capital into markets consistent with one’s SAA, noting that the size of the challenge supports a DAA underweight.

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