The author argues official jobs numbers are unreliable and artificially positive, masking underlying economic weakness. If the data is indeed fake/revised downward, the Fed will be forced to cut rates sooner than currently priced in, boosting long-duration bond prices. A long position on TLT bets on a decline in long-term interest rates driven by dovish Fed action in response to “true” labor market weakness. Actual jobs data could prove accurate, delaying cuts; inflation may remain sticky, preventing rate reductions; market may already price in cuts.
The author argues official jobs numbers are unreliable and artificially positive, masking underlying economic weakness. If the data is indeed fake/revised downward, the Fed will be forced to cut rates sooner than currently priced in, boosting long-duration bond prices. A long position on TLT bets on a decline in long-term interest rates driven by dovish Fed action in response to “true” labor market weakness. Actual jobs data could prove accurate, delaying cuts; inflation may remain sticky, preventing rate reductions; market may already price in cuts.