"Can we have a soft landing in the economy? Friday’s job report shows there is a clear pathway to get there. Mortgage rates fell aggressively down to 6.20%, putting us at more than 1% below the highs of 2022.
The bond market saw that wage growth was cooling down, leaving the Federal Reserve with few reasons to keep the rate hike story going much longer.
We ended 2022 on a solid note as 4.5 million jobs were created last year — and we still have more than 10 million job openings and historically low jobless claims. And now, the growth rate of inflation is falling.
Bond yields fell after the report since wage inflation is cooling down, a key for the Federal Reserve‘s strategy. The Fed will not tolerate a tight labor market, or Americans on the lower end of the wage pool making more money. They believe this is a bad thing and will create too much-entrenched inflation, so the fact that wage growth is cooling off is a positive sign.
If the inflation growth rate and wage growth are slowing down, the Federal Reserve doesn’t need another rate hike. In fact, the Federal Reserve needs its own reset. That is going to be a big theme of mine for 2023 if this trend continues."
Subscribe to our regular newsletter and get exclusive access to our next investment opportunity.