The Economic Week Ahead, January 3-6

The first week of 2023 will be action packed, especially with so many labor market indicators coming out. If they are too strong, investors will fear higher-for-longer interest rate hikes by the Fed. If they are too weak, investors will fear an impending recession. The first scenario is bad for stocks and bonds. The second scenario is bad for stocks but good for bonds. If the upcoming batch of labor market indicators show some slackening of demand for workers, stocks and bonds would probably both react well to this third scenario.

The fun starts with the release of November's JOLTS report (Tue). The focus will be on job openings and quits. Both had been at record highs in late 2021 and early 2022. Both are highly correlated with the "jobs plentiful" series in the consumer confidence survey, which edged up in November and December, but is down from its peak at the start of the year, while remaining relatively high (chart).