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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 was off to a less auspicious start.
Omicron undoubtedly played a role in the short-term, although we are thinking about this in the context of a policy misstep (i.e. the Fed tightening in to a slowdown).
Quad 4 conditions have not been removed from the economy and the probability of a policy misstep has only increased since the start of the year. At the start of January the bond market was implying 3.0 rate hikes by December, since, that number hit a cycle peak of 9.13.
The yield curve has also compressed 59 bps in the same time period with the 1 year forward yield curve inverting and hitting all time lows. Remember, labor is the last of the Mohicans when it comes to cycles.
