Labor Market Weakens as Recession Risks Rise - Implications for Stocks, Bonds and Fed Policy
-
Payroll growth slowed in October, unemployment ticked up, and wage growth eased - signs of a weakening labor market and slowing inflation.
-
Bond yields fell sharply on the report - markets now expect Fed to stop hiking rates soon and start cutting in 2024.
-
Lower bond yields and economic slowdown could lead to a year-end stock rally.
-
But inverted yield curve suggests recession likely within 12 months - soft landing may transition to hard landing.
-
Long-term investors should be cautious of year-end rally and recession risks - consider short-term bonds and managing risks.