fell to a three-year low in April, the data fueled the incentive for the bond market to reassess the view that the Federal Reserve will keep interest rates higher for longer.
A bit of context is needed, however. Job openings spiked in 2021 to an unusually high level as the rebound from the pandemic took root. The surge in openings, although welcome, was unsustainable. Even after the latest update, openings remain above pre-pandemic levels. Nonetheless, the downside directional bias is hard to miss – a trend that looks set to continue as the labor market continues to normalize.
Fed funds futures have lifted the implied probability of a future cut in recent days, albeit only modestly. The September 18 FOMC meeting is still viewed as the earliest date for a lower rate. The market sees higher probabilities later in the year. If correct, the hard numbers for the labor market will reflect stability in hiring, which isn’t the narrative that the bond market has embraced in recent days. Will it matter? Unclear. But one thing that will likely survive: volatility in expectations for what the Fed will do and when.Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors.
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