Bob Elliott argues that the recent optimism on labor market conditions, fueled by improved payroll data and a narrative of price-driven momentum, is premature. A broader look at underlying data suggests caution, implying potential headwinds for risk assets if employment trends weaken.
•Investor sentiment on employment has turned notably positive in recent months, partly due to improved payroll jobs data.
•The author warns that this optimism may be driven by a 'dash of narrative following price,' suggesting a recency bias.
•A broader examination of labor market indicators—beyond headline payrolls—points to reasons for caution.