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Curve Your Enthusiasm
The reflexivity doom loop
Nov 4, 2024
Ian speaks with Jeremy Saunders, an expert from CIBC Capital Markets' XVA desk, about the latest U.S. labor market trends and the implications for Federal Reserve policies. They dissect the recent U.S. jobs data and debate whether labor demand is truly declining. Jeremy shares insights on market opportunities amid political election dynamics and the impact on yield curves. They also explore central bank strategies, particularly Canada’s stance, and discuss specific trading ideas for the upcoming week, including predictions on spread curves.
27:19
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Quick takeaways
- The latest jobs data signals a troubling trend in the U.S. labor market, which is influencing the Federal Reserve's focus on employment over inflation.
- Upcoming elections greatly affect market dynamics, leading to varying trading strategies based on potential fiscal policy changes from red or blue sweeps.
Deep dives
Labor Market Analysis
The U.S. labor market is showing signs of significant weakening, as indicated by the latest Jolts report and employment data. The quits rate, a vital leading indicator for wages, has broken its post-COVID trend and is in decline, suggesting a drop in worker confidence. There is a subtle uptick in the unemployment rate, primarily attributed to private employment losses, which reflects a broader trend of cooling in demand. As this deterioration continues, the Federal Reserve is likely to maintain its current monetary policy path, focusing more on labor market conditions than inflation concerns.
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Listen to the best highlights from the podcasts you love and dive into the full episode