The Labor Market vs the Bond Market

The tightening labor market and increasing confidence we’ve been seeing in the surveys are starting to have an actual impact on people’s salaries. Things are improving beyond just the top few tiers of US workers.

According to Reuters: “U.S. labor costs recorded their largest increase in more than 5-1/2 years in the second quarter, a sign that a long-awaited acceleration in wage growth was imminent. The Employment Cost Index, the broadest measure of labor costs, rose 0.7 percent after increasing 0.3 percent in the first quarter, the Labor Department said on Thursday. That was the largest gain since the third quarter of 2008.”

Labor costs are up 2 percent year-over-year as of June. This is not an outrageous, inflationary rate of growth, it’s normal for a recovery.

What may be abnormal, however, is the Fed’s continued pressure on the gas pedal in light of these conditions. Peter Boockvar, whohas been critical of the Fed’s largesse for awhile, is pointing toward continuing claims as evidence that the Fed is too easy at this stage in the game. “Initial Jobless Claims totaled 302k, 2k more than expected but last week was revised down by 5k to 279k. This brings the 4 week average to below 300k for the first time since 2006 at 297k. Register that for a moment, the lowest 4 week average in claims since 2006 and we have the fed funds rate at zero.”

By the way, if you wanted to know whether or not peak corporate profit margins would be sustainable forever, you’re probably going to get your answer soon if this keeps up.

In the meantime, the bond market remains in denial. Yields on the ten-year Treasury don’t seem to want to lift in a meaningful way, regardless of the meaningful improvements in the labor market (and its confirmation from Q2’s GDP report yesterday). Even with the Fed pulling back fixed income market purchases steadily (they’re down to just $25 billion in QE this month), every bond sell-off is quickly bought.

For now.

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here:

Please see disclosures here.

What's been said:

Discussions found on the web
  1. troy commented on Nov 22



  2. kyle commented on Dec 04


    thank you!!

  3. nick commented on Feb 04



  4. bitcoin evolution reviews commented on Sep 23

    … [Trackback]

    […] Read More Info here on that Topic: […]

  5. Best Dumps Shop 2020 commented on Sep 27

    … [Trackback]

    […] Info on that Topic: […]

  6. bitcoin blazing trader commented on Sep 28

    … [Trackback]

    […] Read More Information here to that Topic: […]

  7. tangerine bank account sign in commented on Nov 26

    … [Trackback]

    […] Find More Information here on that Topic: […]

  8. reddit cbd commented on Nov 27

    … [Trackback]

    […] Find More to that Topic: […]

  9. bestroofguy commented on Dec 06

    … [Trackback]

    […] Find More on on that Topic: […]

  10. 꽁머니사이트 commented on Dec 28

    … [Trackback]

    […] Here you will find 92480 additional Info to that Topic: […]

  11. get redirected here commented on Feb 02

    … [Trackback]

    […] Find More Info here on that Topic: […]