This article was contributed by Prime Lending.
Wouldn’t it be easier if you could roll out of bed, throw on your robe and slippers, grab a cup of joe, and open up the morning newspaper (I know it’s 2025, but a newspaper fits the vibe I was going for) and turn to the column labeled: “This is what you should believe”. We’d read it, trust it, and simply go on with our day… Of course, waking from that nonsensical dream, the reality is the market is dealing with some serious trust issues these days.
Back in the day, the Jobs Number (Non-Farm Payroll) was the gold standard of all economic releases. Forget taking PTO on the first Friday of the month. At 7:30am CST, the markets would collectively hold their breath in anticipation of the result, believing the entire US economy hinged on that one print. Nowadays, traders have shifted their sentiment akin to: “Cool story, bro”.
With each passing jobs number, the response feels more disingenuous, as the market seems to discount the headline figure itself. Moreover, coinciding indicators like ADP, JOLTS (job openings), household surveys, and Jobless Claims often undermine the NFP result (which is lagging). Most importantly, think of what happened with the revisions this past release. How can we trust even the recent level knowing it could be revised down 100k in subsequent months.
Where this leads us is how traders are interpreting reality. If you asked the stock market, its sentiment seems to be “la-la-la-la-la-la…”. No matter what the headline seems to be, whether from fundamentals or from Washington, equities seem to simply tune out the noise. The S&P hit yet another all-time high this week. My thesis above has to do with the dismissal of what the data is telling us (trust issues or not). There seems to be no adherence to signs of greater fallout, and if so, perhaps the market is looking elsewhere to confirm any event horizons. After receiving an in-line CPI (with no telltale signs of tariff pass-through) markets are once again emboldened to ratchet higher (25bps cut in Sept is a foregone conclusion). For me, the canary in the coal mine comes back to stock market over-exuberance. While equities are ripping, it’s tough to justify bond price levels improving (typically treasuries are inversely correlated), thus, giving us our paradoxical dilemma. If the economy is flirting with cracks in the system (ie: employment environment), stocks and bonds can’t both be right.
In a world where revisions rewrite history and sentiment trumps substance, perhaps we should just assume that headlines might as well be written in invisible ink. At the end of the day, whether we are chasing fiction or fact, the further stocks move higher, the greater pressure we will face in rates. So grab your comfy slippers, and your cup of joe… today’s front page news reads “Stock defy gravity but trust us, everything if fine.”