June jobs report shows no signs of a recession. But recession trade is already here anyway
The US economy added 372,000 jobs in June, beating forecasts for 250,000, while the unemployment rate stayed at 3.6%, right where it was expected to be.
"A recession call cannot be made if the labor market is not participating," Dutta, the head of economics at Renaissance Macro Research, said. "The US economy continues to add jobs. So, there is no way the recession (if it comes) will be dated to June 2022."
The $S&P 500 Index (.SPX.US)$ edged lower on the first trading day of a shortened week as investors fled from risky assets. Treasury yields retreated. Meanwhile, the dollar climbed, which made commodities priced in the currency less attractive. Oil sank sharply below$100 a barrel during the week.
Dutta's theory explains all the moves above:“This is a recession trade,” said. “There is no other way of describing it.”
"We're not in a recession right now, but the markets are a discounting mechanism and I think the markets see the economy potentially going into one or getting closer to being one," said Dutta, "We've gone some way into pricing in a recession in the markets, but I don't think we're all the way there."
The Fed has "locked themselves" into an aggressive tightening path, perhaps in a bid to avoid the mistake officials made during the start of the pandemic when they labeled inflation as "transitory," he said. But what if inflation has already peaked? Dutta thinks the headline print in July will moderate "quite substantially" as prices of oil come down.
Still, if a recession does come, Dutta warns investors nothing else but one thing: market volatility.
Disclaimer: The content should not be relied on as advice or recommendation.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
Read more
Comment
Sign in to post a comment
Moomoo News Official Account
How do analysts evaluate the market?
18KFollowers
46Following
39KVisitors
Follow
Mr Trecherous :
Revelation 6 : So we add 372,000 jobs and the unemployment rate stays the same, 3.6%. Everywhere I go I see help wanted signs and closed or shortened business hours because they are short-staffed. I see upfront and weekly bonuses being offered to sign on. I think it is safe to say that either the 3.6% number is an illusion created by government officials or people who don't desire to be employed.
M1ke1229 : Don't believe everything you hear when it comes to who's in office at the moment
MonkeyGee : oh don't worry Biden will make sure there is a recession and a collapse.
Revelation 6 Mr Trecherous : His ignorance knows no limits. If his mental capacity is so diminished, Jill knows, and as hard as it is to do, she needs to call him out on it and end this before it goes any further.
Revelation 6 M1ke1229 : When they told me men could get pregnant, everything they said became a lie.
Revelation 6 MonkeyGee : He's certainly doing everything he can and then some.
Mr Trecherous M1ke1229 :
Mr Trecherous Revelation 6 :
Mr Trecherous Revelation 6 :
View more comments...