Haywire Labor Data Points in Every Direction

Last Week’s Macro Events

Employment data

JOLTS (job openings) missed expectations by three std deviations, while Nonfarm Payrolls by four std deviations, in opposite directions. 

G7 Central bank rate cuts

Both The Bank of Canada and the European Central Bank cut interest rates last week, marking the first two G7 countries to begin lowering rates.

Global election news

64 countries (49% of the world) are holding elections this year. Mexico and India both had election results last week that surprised forecasters.

OPEC+ backing away from cuts

OPEC+ signaled they would begin phasing out 2.2m barrels per day of production cuts in Q3, signaling increasing supply coming online.

Fed rate cut speculation whipsaw

Interest rates gyrated as weak jobs data early in the week increased hopes of a July rate cut but hopes were dashed with Friday’s payroll report.

What the Bulls are saying

While last week’s employment data tempered enthusiasm for moving forward the rate cutting timetable, bulls were not dissuaded from expecting a dovish Fed in 2024, with the labor market still generating jobs and a consumer willing to continue to provide fuel for the markets.

What the Bears are saying

There is not enough data to justify that rates are sufficiently restrictive to cool inflation back to the Fed’s targeted level and risk remains skewed for the Fed staying on hold longer than expected, increasing the probability of a major economic slowdown.

Focus Point Outlook

Quantitative Models 

The Focus Point Leading Market Indicator’s latest measurement was Neutral Conditions, signaling a balanced view of risks.

Qualitative Outlook

We think all roads point to the labor market – to the degree it continues to stay healthy, it supports housing and consumption, but a deterioration could bring negative surprises.