USA: JOLTS Job Openings Increase More than Expected in October (Goldilocks)
Bill Dudley SAYS (and some put spreads bot...)
Saw this from Goldilocks regarding this mornings JOLTS report …
BOTTOM LINE: Job openings increased by 431k in October from an upwardly revised level, and the quits rate declined by two tenths to 2.8%, according to the JOLTS report. The decline in the quits rate may have contributed to the sequential slowdown in AHE growth in October and November, and supports our view that wage growth will cool now that enhanced unemployment benefits have expired.
So it would seem then to mean that while transitory has been retired, it may in fact be NOT DEAD YET? … And I point it out because it would seem to ME there’s some extra attention being paid TO none other than Princeton’s own (and former Fed insider) Bill Dudley and his latest threat … I mean OpED in Bloomberg.com
The Next Fed Meeting Will Offer More Surprises
Beyond the taper, the longer-term outlook for interest rates might come as a shock to markets.
…For 2022, I expect a median forecast of 0.8%. This would signal three 0.25-percentage-point increases next year – not so many as to require a rate hike in March, but enough to be consistent with the faster taper and the unemployment and inflation outlook.
For 2023, I expect officials to project four more rate hikes, taking the median target rate to 1.8% a year earlier than in the September projections. Such gradual, consistent tightening makes sense once the Fed gets started. But policymakers aren’t likely to anticipate moving more quickly as long as they project inflation to remain below 2.5%.
For 2024, I expect the projected target rate to reach the 2.5% level judged as neutral. Anything less seems hard to justify, given that the economy will have been running beyond full employment and above the Fed’s 2% inflation target for several years.
One could make the case that the 2024 interest-rate projections should go beyond neutral, signaling greater resolve to keep inflation in check. But I doubt officials will have the stomach for that, given the uncertainties surrounding any long-term economic forecast, made even more complicated by the constantly evolving pandemic.
I’m told there has been a fair amount of buying of put spreads (0EM2 98.25/97.75ps bght for 11.5 in 30K total) and should Dudley be right … OR if the consensus at least moves in that direction, this PS will more than likely be up closer TO 20 …
I’m reminded that none of this actually has to come to fruition, but rather the consensus needs to see it as incrementally possible and THEN TRADE IT as such.
Think RENTALS as opposed to long term ownership … ?