Something for everyone in the US JOLTS data, from over the weekend.

Non-farm payrolls (NFP) at 263K is an ongoing moderation from “too strong”, and the month-on-month average hourly earnings (AHE) at 0.31 is also a moderation from the c0.40 prints that were giving everyone a wage-price-inflation-spiral-induced heart attack.

Combine that with last weeks moderation in job openings data, and the odds of a “soft landing”, in which the economy doesn’t collapse, and inflationary pressures abate, have increased.

That’s good for risky assets, rather than bearish.

The market sold off nonetheless. Our take – the market is very negative, with recession, to varying degrees, priced in across international equity markets. We don’t know how far (how much further) that goes, but we do know we want to be nibbling away, commensurate with our risk appetites, as the market does so.

It is similar for credit, where spreads are now getting closer to what we’d term fair value. Adding a modest amount of credit risk, noting the same points outlined above (that risk is high, market sentiment poor, and that a trade can easily go against you) apply here.

We’ve been quite underweight credit, and are starting to change our tune, albeit fractionally at the margin.

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