Jobs Data and Core PCE for Soft Landing: SPY QQQ

October 06, 2023, 13:01 pm ET, BY Thomas H. Kee Jr- Editor, Stock Traders Daily| Editor: Thomas H. Kee Jr. (Follow on LinkedIn)

Strong Jobs + Tame Core PCE = Sweet Spot

Note:  The information herein was already disseminated to subscribers of Stock Traders Daily shortly after the open, and to Bloomberg Terminals, FactSet, Refinitiv, and other institutonal terminals.  To received this type of commmunication from Stock Traders Daily in real time, please subscribe.

Powell’s apparent comfort level in his press conference, the one that followed the recent FOMC decision, almost certainly will be questioned given this Jobs blowout jobs data.  One saving grace is that the unemployment level remained stable even in the face of stronger than expected hiring, but there is a second one, and it is the probability of a Soft Landing.

The reading from the dot-chart, which ultimately suggested that rates were still set to increase moderately, is looking more likely to prevail given this data, unless you take the dual mandate into account.

Yes, the level of interest rates may already be at a level that will, over time, bring inflation down to the 2% level as Powell suggested, but Powell and the FOMC have been strongly correlating Jobs growth with the persistent inflation levels.  That tone calmed recently, but the dual mandate still comes into play.

That dual mandate is moderate inflation, and full employment.

Interesting, with tame Core PCE inflation readings recently, and a strong Jobs number, the economy is in a relative sweet spot already.  Powell suggested in the press conference that the economy was resilient to higher rates, and that seems to allow him to reiterate his conclusions that a soft landing was very possible.  Today’s Jobs data supports a soft landing.

Given the strong Jobs Data today, and the tame Core PCE readings recently, the FOMC may be getting exactly what they want, in terms of their dual mandate.

Support and Resistance Plot Chart for SPY

Real Time Updates for Repeat Institutional Readers:

Factset: Request User/Pass

Bloomberg, Reuters, Refinitiv, Zacks, or IB users: Access Here.