US labor market: issues under the surface

The US labor market has structural problems that are more significant than a headline unemployment rate nearing 5% would suggest.  The skill mis-match narrative is visible in the data. The ratio of hires to job openings has collapsed. Source: Bloomberg, Macrobond,...

US Overheating Risk

The Zarnowitz Rule states that the steeper the downturn, the sharper the upturn. This was on hold while Covid-related restrictions were in place, but now we should expect to see it in full flight, turbocharged by fiscal stimulus. Overheating risks are rising The US...

Reflation Sensation

Bloomberg and Google news trends show reflation headlines are everywhere. Widespread coverage is typically a sign that trends are starting to exhaust and that markets are due for a period of consolidation, before the next leg higher Our growth and liquidity LEIs...

Tracking the US’s Labour Market Recovery

The US labour market has pockets of tightness. However, it’s unlikely we’ll see rapidly rising household inflation-expectations until we see higher low-skilled wage growth and rising ex-transfer incomes Our indicators show that at this relatively early stage in the...

Market Senses Rising Inflation Risks

Inflation remains one of the few areas where there is not an overwhelming market consensus. We see rising inflation risks The market is running out of non-consensus narratives, now that we can see the vaccine being rolled out and the potential for a strong economic...

Sweep Elections and Sector Mean Reversion

The best performing sectors before sweep elections tend to underperform afterwards, and vice versa We dig through the historical data on previous sweep elections and come to two conclusions: 1) sweep elections do mark changes in relative sector performance; and 2) the...

Steeper and Cheaper

While further gains will be harder from here, indicators continue to point to a supportive backdrop for yields and the yield curve, with the latter historically tending to steepen through US elections In our October monthly report (The Case for Banks – October...