Bond yields would probably have fallen as wage growth slowed if the jobs report were weaker than expected. 10-year yields rose after the jobs report, even as wage growth slowed as bond traders took advantage of good data to sell bonds.
But I like the downward trend in inflation and the fact that the labor market is still strong.And as I’ve been arguing for a while, we’ve been struggling to break it 3.42% and head down.
So far, it has hovered around these levels. Yesterday, mortgage rates fell below 6% for the first time in a while, rising 0.20 basis points from 5.99% to 6.19%.
This is the breakdown of jobs created this month. Giving a little more weight to the single jobs report puts things back on average growth trends. But it’s a solid report for most sectors of the economy.
We expect a return to trend growth as the slowdown in population growth limits it to some extent. It’s one thing to bring back all the jobs lost to Covid-19, but we have to remember that there is demand for replacement labor and time lost due to a short recession. .
Click here for a breakdown of the unemployment rate by educational background for those aged 25 and over.
- Below high school diploma: 4.5% (Before 5.0%)
- High school graduates with no university experience: 3.7%
- University or Associate’s Degree: 2.9%
- Bachelor’s degree or above: 2.0%
Traditionally, people without higher education have the highest unemployment rates during recessions and economic expansions. I always stress that a tight labor market is a good thing and I would like to see lower unemployment rates for all groups, not just college graduates.
slowdown in wage growth
On the labor front, there was some great news this week for those seeking low interest rates. Both the Employment Cost Index and Average Hourly Wage Growth data in today’s Jobs Report showed a decline in those data lines.
A spike in these two data lines could give the bond market a different view of the economy. But we don’t see the wage spiral that many feared.
The downward trend in wages evident in today’s jobs report is a big reason why 10-year yields are not above 4.25% and mortgage rates are near 8%. The bond market knew the premise of the wage spiral was not materializing.
Some believe wages will spiral out of control towards the end of 2022, and the only way to slow wage growth is to destroy the economy and increase unemployment. I’m sorry, Charlie. it’s not happening. Wage growth is slowing as the labor market tightens.
of federal reserve Curbing wage growth has become important because people making more money is bad for inflation. They believe the best way to do this is to make the economy more painful, as they say.
I’m not a big fan of this premise.What happens in a pandemic usually doesn’t last for years after the pandemic is over.The labor market is doing well. Wage growth is slowing despite high job openings, low unemployment claims and a 3.4% unemployment rate. After a global pandemic, we don’t need to collapse the economy to keep inflation under control.
solid reports and weeks
I doubt we’re starting a new trend of more than 500,000 monthly job additions, but today’s job report surprised many, myself included. I’m the labor market mogul who tells people that in this recovery he has 10,000,000 vacancies and this month he’s going to be 11 million. I was surprised by the size of this print.
There are two to three reports that have come to light, and a few reports that have exceeded estimates, but this is Godzilla’s beat. I warn those in this expansion phase to follow unemployment claims data, which is still under review. 200,000Not even a Labor Fed pivot until the 4-week moving average hits 323,000and the 4-week moving average is 191,750.
With a good labor market and slowing wage growth, we don’t need to trigger a recession to keep inflation down. We need more time and supplies. A disruption of demand tends to affect future supply production, so supply is always the best way to deal with inflation.