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Below is a complimentary research note from our Financials analyst Josh Steiner. Check out Josh's product Financials Sector Pro, for the latest financial updates. Click HERE to learn more. |
HEDGEYE FINANCIALS WEEKLY LABOR MARKET READING
We saw a strengthening in the downtrend of claims coming out of 2021, but 2022 is off to a less auspicious start.
Omicron is undoubtedly playing a role in the short-term, although we're left thinking about this in the context of the Fed's recent hawkishness.
As Macro analyst Christian Drake pointed out to start January as Jobless Claims increased "this underscores the burgeoning emergence of Quad 4 conditions and the derivative prospects around policy missteps (i.e. tightening into a slowdown)."
These Quad 4 conditions have not been removed as everyday we approach March and the probability of a policy misstep has only increased since the FOMC meeting.
It was just two weeks ago that the bond market was implying 4.9 rate hikes by December, now that number is 6.15. The yield curve has also compressed 14bps in the same time period with the 1 year forward yield curve inverting.
