Market Wrap – JOLTs figure slumps

A big slump in JOLTS data this afternoon caused major moves in the market, with the VIX jumping by nearly 4 percent as traders factor in a less aggressive FED.

The number of job openings in the United States fell by 632,000 to 9.9 million in February 2023, the lowest level since May 2021 and below market expectations of 10.4 million signalling the labour market might have started cooling.

Over the month, the largest decreases in job openings were in professional and business services (-278,000); health care and social assistance (-150,000); and transportation, warehousing, and utilities (-145,000).

On the other hand, the number of job openings increased in construction (+129,000) and in arts, entertainment, and recreation (+38,000). Meanwhile, the number of hires and total separations changed little at 6.2 million and 5.8 million, respectively. Within separations, quits (4.0 million) edged up, while layoffs and discharges (1.5 million) decreased.

The moves were fairly widespread as the EURUSD pair surged towards the 1.1000 benchmark level while the GBPUSD pair easily cracked the 1.2500 resistance zone.

Stocks naturally slumped as the JOLTS data implied that the economy was starting to splutter. The loses were fairly moderate though and as bonds also saw significant volatility.

Gold was a major beneficiary move as it rallied to a new 2023 high above the $2,000 level. Citigroup sees gold hitting $2,300 and coming in the short term.

Citigroup said, “Gold has found itself on solid ground so far in 2023 with prices averaging ~$1,895/oz year-to-date as the US Dollar’s strength tapered and inflation abated slightly as oil came off its peaks.”

Citi sees see four potential macro drivers for the market here. Firstly, STIR traders repricing to a significantly lower terminal rate and putting 2H’23 insurance cuts back on the table, prompting a rapid rally across the rates curve.

Secondly, concerns about potential systemic risk as potentially deflationary or increasing likelihood of recession, leading to investor demand for the ‘lower vol’ safe haven;.

Thirdly, light positioning for gold ETFs and options heading into the March 22 FOMC. And fourth, physical gold having no counterparty credit risk.