The market got off to a strong start on Tuesday morning following rumours that China could start easing some of its Covid restrictions that are hurting its economy. There was never confirmation of those rumors, and this story began to fade into the public eye, but market attention temporarily shifted to economic data.
Investors had hoped the information would be benign or reflect some slowdown in inflationary pressures. The ISM report on structural output and expenditure was higher than stated, but the main factor of the JOLTS report on task releases and hard work rotation. There are more task posts than expected, last month’s knowledge was revised upwards.
The Fed needs to see the share of open jobs fall to unemployment; This would mean that source and demand are closer to equilibrium. That didn’t happen and the market quickly dried up.
This knowledge is a reminder that the Fed has had no falsified reports that inflationary pressures are rapidly decreasing. That’s what they want to change and pause, and it’s just not there.
Regardless of the actual data, investors seem confident that the Fed will imply a slight change that will generate a positive market response. Investors have been badly burned several times this year when they have been too positive. example. Not only did Powell not make complacent comments, but he was also relentlessly aggressive.
Throughout the year, investors became accustomed to a Federal Reserve that supported the stock market. That is no longer the case. In fact, the Fed does not need to provoke a really extensive market rally, as this would fan the flames of inflation and make its task difficult.
The report will be published on Wednesday afternoon and I will talk about some business methods first thing in the morning.
Have an afternoon. I’ll see you tomorrow.
At the time of publication, DePorre had nothing about any of the titles mentioned.
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