Labor Market Shows Signs of Slowing

Rates fall after morning data. Data released this morning revealed slowing labor and housing markets, sending Treasury yields down 6-10 basis points across the curve. Continuing unemployment claims and home sales figures were among the misses, with the former rising to its highest level since November of 2021. Elsewhere, earnings calls contributed to declines in the S&P 500, NASDAQ, and DOW, with the NASDAQ Composite suffering the largest losses (-0.80%) of the trio after Tesla stock took a significant hit.

Multiple Fed officials make hawkish comments. Loretta Mester argued today that “demand is still outpacing supply in both product and labor markets and inflation remains too high” and added that the Fed will “need to move somewhat further into restrictive territory this year” in order to push inflation toward the stated goal of 2%. Lorie Logan was more neutral, stating that she is still assessing whether the Fed has made enough progress in its fight against inflation. She did, however, say that inflation has been “much too high,” and is tracking multiple factors to determine the optimal path forward: improvements in inflation, monitoring the effects of stress in the banking system, and the imbalance between supply and demand in the labor market.

Day ahead. PMI data, expected to come in just below last month’s levels, will lead the day at 9:45 AM. Dovish Fed voter Cook will make public comments at 4:35 PM.