Yesterday’s job openings (JOLTs) data notes a weakening in the labor market. Tighter financial conditions clearly starting to impact labor demand. Job openings fell by -1.1m openings, the single largest monthly decline since before the pandemic.
The importance of this to the markets is that this data is both important and closely followed by the Fed. Fed chair Powell recently quoted the relationship of openings + employed to the overall labor force as one of the key metrics the Fed watches when evaluating the labor market. I think the Fed will like the fact that higher rates and tighter financial conditions is slowing the labor market. It’s just one month but trends need to start someplace, and this is likely the start of a weaker period for labor. The Fed wants this to happen. It won’t prevent the Fed from hiking rates in November, but it will force them to have conversations about how much. We need a soft non-farm payroll number to really get things “pausing”. Likely to happen this fall.
This autumn, “bad news” = “good news”.
Chief Investment Officer
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