The Fed is trying to slow down hiring to slow down inflation.
But Fed hikes are so far not having a negative impact on the labor market. The employment report for October showed job growth even in the housing sector. And also in manufacturing, despite the rising dollar. In addition, October data for startups shows that layoffs at startups are beginning to slow down, see the first chart below.
The bottom line is that the economy is not slowing down as quickly as the Fed would like it to. That is why the Fed has no other option than to continue to be hawkish. As a result, there is more downside risk to the 60/40 portfolio, see the second chart.
Our daily and weekly economic indicators for the US economy are attached.
Source: Layoffs.fyi, Apollo Chief Economist. Note: Top 5 sectors that account for layoffs: Transportation, Food, Travel, Finance, and Real Estate.Source: Bloomberg, Apollo Chief Economist. The Bloomberg US BMA6040 Index rebalances monthly to 60% equities and 40% fixed income.
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