The US job market in October has signaled a deceleration, sparking discourse on whether this could imply a softening in the Federal Reserve’s aggressive stance against inflation. Charles-Henry Monchau, Chief Investment Officer (CIO) of Syz Group, drew attention to this shift in a LinkedIn post dated 3 November 2023.

Bank SYZ SA emerged with an intent to diverge from the conventional practices of Swiss Private Banks, striving to become a distinguished family-controlled boutique Private Bank in Switzerland. The Syz Group, steered by Eric Syz and his two sons, was established in 1996 and has since been a representation of a solid family entrepreneurship lineage. The group stands on a sturdy financial footing, holding equity significantly above the regulatory requisites of Switzerland, reflecting a picture of stability.

The operational arms of the group span across four principal segments: Banque Syz, aiming to provide a new facet to private banking in Switzerland; Syz Asset Management, mainly funneling assets of Swiss institutional investors into bonds and money market instruments; Syz Independent Managers, serving as a comprehensive custodian bank to external asset managers; and Syz Capital, opening avenues for investors to align their investments with the Syz family in scarcely accessible alternative markets.

Monchau’s analysis of the Labor Department’s report indicates that the nonfarm payroll numbers increased by 150,000, which did not meet the Dow Jones’ anticipated increment of 170,000.

Diving into specifics, Monchau notes that the employment shortfall can largely be attributed to the United Auto Workers strikes, particularly affecting the manufacturing sector’s job numbers. This has also been reflected in the rise of the unemployment rate to 3.9%, surpassing the expected steady state of 3.8%. In his post, he points out the household survey’s findings, which showed a decline of 348,000 workers and a 146,000 increase in unemployment rolls.

Furthermore, Monchau highlights that the more expansive measure of joblessness, including discouraged workers and those in part-time roles due to economic factors, experienced an increase to 7.2%. This encompasses a 0.2 percentage point rise, offering a broader perspective on the labor market’s health. The same survey indicated a notable decrease in employment of 348,000 jobs during October.

Reacting to these developments, Monchau underscored in his post that the dollar had weakened and bond yields had fallen, outcomes that align with a growing sentiment among investors that the Federal Reserve may soon reach the end of its aggressive interest rate hikes. This is a direct reaction to what he termed “VERY disappointing US jobs data,” which has fed into expectations that the Federal Reserve could potentially ease up on its stringent anti-inflation measures.