U.S. labor market statistics remain strong; however, the market may be weaker than the headline numbers imply. Unemployment is low, yet jobs are harder to find. For investors, this means the labor market is not causing meaningful bump of inflation.
Fed Chair Kevin Warsh delivered a distinctly hawkish message, emphasizing that inflation, not employment, is currently the Fed’s primary concern.
Fiscal concerns and long-term corporate bond yields were in focus last week. - A.I. is taking over the debt market. A.I. debt demand is high, so A.I. companies are issuing debt and this is increasing the supply of bonds. The elevated issuance of corporate bonds may be contributing to a rise in yields.
The fundamental backdrop and technical trend continue to show strength. - Household balance sheets remain strong, with leverage, debt service, and delinquencies all within historical ranges.
The fundamental backdrop and technical trend have paved the way to new all-time highs.
The Bear Story: • The Mag 7 is lagging.