SignalPlus Macro Analysis (20240510): Market data is generally favorable for risk assets

Obviously nothing big happened this week, just the small-beating-than-expected weekly jobless claims (231k vs 212k) was enough to push all major asset classes higher in unison, and given the Fed鈥檚 recent shift to focus on the weakness in the job market, the market undoubtedly took this information very seriously and tried to find all signs of a slowdown in the job market to rekindle hopes of a rate cut. As mentioned earlier, the current asymmetric risk-reward setup (the Fed ignores high inflation and looks for signs of a slowdown in employment) should generally favor risky assets, so stocks, bond prices and even BTC all rose in tandem after the release of the unemployment benefit data.

Looking more closely at recent employment data, while nonfarm payrolls are still relatively healthy at 175,000 a month, and the unemployment rate is still low at 3.9%, some alternative job market indicators are beginning to show some cracks, with Powell himself specifically mentioning the decline in hiring rates and weak employment surveys as signs of weakening labor demand in his QA. In addition, other sub-indicators, such as an increase in permanent unemployment, a decline in the quits rate, a decrease in hiring plans, and a widening hard-to-find job ratio, all suggest that the U.S. economy may fall into a more pronounced job market slowdown in the second half of the year, while the excess savings accumulated during the pandemic era have also been exhausted.

Next week, the CPI data will be released, and the market should become active again and challenge the recent ideal prosperity of the market. I wish you all a happy weekend!

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