Fed Wants To See Fewer Job Openings

It's been a great October so far for bond and stock investors. Last week's pivot by the Bank of England seems to have convinced investors that the Fed now must give more weight to financial stability, which means that the current monetary tightening cycle might end sooner rather than later.

Furthermore, yesterday's M-PMI report for September showed that the manufacturing sector is weakening and that inflationary pressures are abating. Today's JOLTS report for August showed that job openings have started to fall. The ratio of job openings to unemployed workers fell to 1.7 from around 2.0 earlier this year (charts below). The Fed wants to see this ratio fall closer to 1.0. That  way there will be more slack in the labor market, which should cool wage inflation.