US jobs data

The moderation continues. Look at AHE (average hourly earnings), printing at 0.27% mom. That is a very workable annualised rate, 3.3%, and that level of wages growth, adjusted for productivity, would be commensurate with the Fed’s inflation target.

Job ads at 236K is only just a touch above where it needs to be, and given long and variable lags, plus an added layer of credit contraction post the Silicon Valley Bank collapse, translate to policy on hold, in our view.

The market is right to price cuts.

Temporary help (a good leading indicator, given contractors are usually the first to go) has rolled, and job openings have peaked (it was likely overstated, by intentions, in that firms had offers out there in the market to keep applications “warm”, but never really intended to follow through) and initial unemployment claims data is moving up.

It is all in context of rates going from 0% to 5%, otherwise, with inflation at current levels, you’d suggest further hikes.

Like all views, these are strong opinions, loosely held, and conviction, the average of the two, is variable. But, so is the data, and the interpretation of trends (up, down, flat) is coming and going, as revisions change prior reads on the trajectory.

Hence, to a degree, rangebound markets, where “things” haven’t broken, clearly, in one direction or another, for any length of time. Although unrelated to the main points here, it’s why some of the trend following Alts strategies have had trouble, over the last 6 or so months.

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