Advisor Login Contact Us


The labor market remained strong but wage gains somewhat cooled.  Non-farm payrolls rose by 223,000, exceeding the 203,000 estimate.  The unemployment rate decline to 3.5% but the labor participation rate increased to 62.3%.  Consensus was expecting a 3.7% rate and 62.2%, respectively.  Wages however only increased by 0.3% versus the expected increase of 0.4%.

The Federal Reserve is adamant that unemployment must increase by 1 million people to quell cost push or wage inflation.  As noted many times, the labor force is still 3.5 million workers smaller than it was in January 2020.

The economy is short of workers and there are two ways to increase supply…increase unemployment or increase the supply of workers.

Volumes—often with conflicting conclusions– have been written as to why the workforce has shrunk by 3.5 million workers since January 2020.

Unfortunately, the Fed is employing the only tool at its disposal to quell wage inflation…increase the supply of workers by trying to slow the economy.

The “market” is now suggesting the terminal rate is now 4.90% down from 5.06% right before the data was released and renewed talks of a “pivot” in 2023.  Are these realistic expectations given Fed comments even after the statistics were published?

Equites advanced strongly off the lower-than-expected print on wages and the nominal increase in the LPR.   Many are asking as to whether the gains are sustainable given that little has changed.  Bloomberg writes that most of the trading was technical and momentum in nature, thus suggesting no real conviction.  The term, however, “Goldilocks” was featured prominently throughout the trading session.

The economic calendar is comprised of the CPI, durable good orders, a small business sentiment survey, import/export prices and wholesale inventories.

Last night the foreign markets were up.  London was down 0.06%, Paris up 0.31% and Frankfurt up 0.68%.  China was up 0.58%, Japan up 0.59% and Hang Seng up 1.89%.

Futures are higher by 0.25%, driven by China’s reopening trade and expectations of slower rate hikes.  Oil is up about 4%.  The 10-year is off 8/32 to yield 3.59%.

Return To Index Page
Kent Engelke

Chief Economic Strategist Managing Director

The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. This material is being provided for informational purposes only. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the securities, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. If you would like to unsubscribe from this e-mail distribution, please reply to this e-mail and indicate that you wish to unsubscribe in your response.