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US unemployment and Fed pivot

US Unemployment has been low and incredibly stable despite many potential threats. It’s also been the stepping stone the #fed has used to continue hiking rates to fight inflation. Investors, and economist in particular, have been underestimating the strength of the job market for the longest period in recorded history, as you can see in the chart below. You can also read this chart as the “pívot hope”: the market has been predicting weakening job market hoping the fed will pívot and lower interest rates, but it hasn’t happened so far. At some point, as the #ratehikes sink in, predictions will revert to the mean, as it happened in the past, and the unemployment report will not support the fed thesis. Hopefully it will coincide with inflation close to the Fed’s target of 2%. Until then, no pívot.

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Source: Bianco research

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