September’s JOLTS Job Openings ended any remote thoughts that the Fed will not increase the overnight rate by 75 bps for a record fourth consecutive time today.  Furthermore, the data resurrected the possibility of another 75-bps increase at the December meeting.

Job openings unexpectedly rebounded in September, likely fueling further wage gains, and adding pressure on the Fed to extend its aggressive campaign to curb inflation.

The number of available positions increased to 10.7 million in September from a revised 10.3 million a month earlier.  The median estimate called for a drop to about 9.8 million openings.  There are 1.9 jobs available for every unemployed person, up from 1.7 in August according to the data.

The surprise pickup in vacancies highlights the unrelenting demand for workers despite mounting economic headwinds.  The persistent imbalance between labor supply and demand continue to underpin robust wage growth, adding to widespread price pressures and reinforcing expectation for yet another large rate hike today.

The latest increase in openings erased much of August’s slide, which, at the time, had suggested a notable moderation in labor demand.

To write it differently any hopes for a dovish pivot in the intermediate future were again dashed considering the strength of the job market as it is a major factor of Fed policy.

The Fed has also targeted housing to curtail inflationary pressures.  According to the WSJ, with mortgage rates now above 7%, just 133,000 homeowners can refinance, down from 19 million in late 2020.  Moreover, the amount of house one can buy for a $2,500 monthly mortgage market has dropped from around $750,000 to $450,000.   Writing it differently, the monthly payment on a $300,000 mortgage is now more than $2,000, at least $700 more than in January.

Has the Fed succeeded in crushing the housing market given the inability for most to “move up” in home purchases and the inability of homeowners to refinance?  Perhaps.

The Fed is in a daunting position.  Not only is the Fed facing the twin challenges of battling inflation while worrying about jobs and growth, a third problem may also be rising…maintaining financial stability.

The volatility in the markets is deafening, partially predicated by government fiat that has eviscerated market stabilizing mechanisms amplified by the massive proliferation of technology-based trading utilizing headlines and momentum as guidelines.

The Fed’s post meeting statement might take upon even more significant given what the Fed could potentially signal about its future moves.  Some think the Fed should suggest a significant slowing of the pace of rate hikes in face of a weakening economy while others given that core inflation is still going up, think the Fed should maintain its hawkish tone and signal the continuation of a robust rate hikes that point to a higher peak rate.

If the post meeting statement points to a higher peak rate, downside volatility may increase as will the odds of “something breaking” in the financial system.  Conversely if the post meeting statement is dovish, the October’s advance could continue.

Commenting on yesterday’s market activity, equites came off session lows but could not improve much more because of the specter of today’s FOMC meeting.  Big tech weighed on equites while energy and financials advanced.  Bloomberg writes it was the 26th time in 2022 the S & P 500 erased a gain or loss of at least 1% in one session—the most for any year since the financial crisis.

The bond market was as equally volatile with yields ending higher across the spectrum.

Last night the foreign markets were down.   London was down 0.43%, Paris down 0.22% and Frankfurt down 0.10%.  China was up 1.15%, Japan down 0.06% and Hang Seng up 2.41%.

Futures are flat.  The 10-year is up 1/32 to yield 4.05%.


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