Jobs and wages
The US jobs and wages data was again ahead of expectations, in a good way, for something like the 13th month running.
Wages growth (AHE, top right) remains robust, but lower than the assuredly inflationary levels of 2022 (where it was just too high) and the non farm payrolls growth of 339K signals that the underlying jobs market remains very strong (alas, too strong, and thus likely another hike or two, even as the Fed skips the next meeting).
But with the unemployment rate edging up (3.7%, top row, middle graph) this total picture of jobs growth up, wages growth moderating, and the unemployment rate stepping up slightly is very much the essence of Goldilocks, or the soft-landing path.
In our flagship balanced portfolio, we are sitting around 55% in equities (across all forms, including the REITs) which is a view predicated on soft-landing. You couldn’t have that much without a reasonable expectation of a soft landing, and the above indicators are very supportive of this idea.
Against that, of course, remains the terrible track record of central banks in generating said smooth landing, which is why we also hold a goodly lot of government bonds (with solid yields on offer at ~3.6%) and a goodly lot of high quality investment grade credit.
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