By Ven Ram, Bloomberg Markets Live reporter and strateigst
Stocks seem to be increasingly growing in conviction that inflation will slow sufficiently without the US economy rolling over. That is the dream-like scenario of a soft landing, but it’s also a dream. So, enjoy it while it lasts.
The S&P 500 has added to its already impressive gains for the year after the slower-than-forecast inflation numbers for October, but that stray swallow isn’t a reliable indicator of warmer weather. While we saw price pressure ease successively for 12 months through June, the trajectory has since been erratic. And it pays to not forget that core inflation is still running at twice the Federal Reserve’s target. Little wonder that Treasury yields resumed their upward journey Wednesday after Tuesday’s febrile declines.
The Fed estimates that the labor market won’t come into balance until the jobless rate climbs to at least 4.1%. While the unemployment rate nudged higher last month, the average this year has been 3.6% — far from levels that would bring the employment market into balance.
As Chair Jerome Powell cautioned recently, it may be a good idea to beware of head fakes in…
Read the full article here