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Pre-Markets Lower Ahead of Big Jobs Week

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Don’t look now, but we’re embarking on another Jobs Week this week. From JOLTS data for October tomorrow to ADP private-sector jobs for November, Weekly Jobless Claims Thursday and the big Employment Situation report on Friday, including November monthly job gains from BLS and a fresh Unemployment Rate. We start a little slow on economic data today, with just Factory Orders for October out after the opening bell.

Ahead of today’s normal trading session, only the small-cap Russell 2000 is in the green at this hour, +0.53%, while the Dow is -0.24%, the S&P 500 -0.33% and the Nasdaq -0.39%. We come off a trading week where only the Nasdaq finished (marginally) in the red, with the Russell again leading the way, +3.91%, followed by the Dow, +2.38%. Year to date, all major indices are decidedly in the green, thanks to a robust November trading month bouncing off late-October lows. The Nasdaq leads by a wide margin: +45.84%, followed by the S&P at +19.27%.

So this temporary lull in our weekly economic calendar gives us a chance to survey the landscape: JOLTS numbers are expected to melt down another 200K to 9.4 million — notably down from the extreme 11.23 million job openings we saw back in December of last year (and 12 million from early 2022). ADP and BLS figures are expected to rise — to 120K from 113K previously and 190K from 150K previously, respectively — but from low bottoms of the cycle (89K on ADP from September and 105K in June on BLS). Jobless Claims are expected to continue to rise — toward 2 million on the longer-term side.

Without predicting any surprises one way or another, jobs data is expected to remain overall complimentary to a good economy, even as joblessness — especially on the longer-term side — continues to creep up. Continuing this trajectory for, say, the next few months may present some employment issues, such as those analysts had been expecting as long as a year ago, and it may paint a somewhat different picture for the domestic economy moving forward.

However, this would likely be considered a “good problem,” particularly among those looking to see the Fed lower interest rates sooner than later. The next Fed meeting on monetary policy is next week, where there is virtually zero chance interest rates move either direction from their current 5.25-5.50% range, but there are plenty of market participants looking toward the June 2024 meeting — if not sooner — for Fed cuts to rates. This would only happen if economic deterioration was becoming an issue; at this stage, it’s not visible, even on the horizon.

This has not stopped investors from bidding up gold — now at a record high $2100 per ounce — nor Bitcoin, which is near $42K at this hour — not really close to record highs from November 2021, but moving toward the April 2022 peak. Meanwhile, bond yields remain relatively cool from inflamed levels of a few weeks ago: 4.615% on the 2-year and 4.247% on 10s — still inverted, of course, as it has been since early July 2022, but well off the widest of inversions, as we witnessed this past summer.

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