Good News for Labor Proves Bad for Stocks | 6 Jun 2026

Nuggets

Good News for Labor Proves Bad for Stocks | 6 Jun 2026 | DoubleLine Capital · Nuggets

ISM Manufacturing PMI (May): Printed expansionary at 54.0, marking 5 consecutive months of growth and the highest absolute reading since May 2022. Aggregate demand remains robust, but the underlying "Prices" paid metric is heavily elevated, signaling persistent raw material cost pressures [00:08:04].
JOLTS Job Openings (April): Surprised significantly to the upside, printing at 7.6 million openings—beating consensus estimates by roughly 750,000. The entire surge is attributed to a single macro segment: Professional and Business Services. This moves the job openings-to-unemployed ratio to 1.03, showing a balanced labor market. However, core operational turnover metrics (hiring, separations, and quits rates) remain pegged at or within 0.1% of local historical lows, pointing to a rigid "low-turnover" labor dynamic [00:08:37].
ISM Services PMI (May): Displayed strong resilience with a 54.5 print, beating both consensus expectations and the prior month's data. While consumer demand and business activity categories look healthy, the internal employment component registered its third consecutive month in contraction. Critically, the "Prices Paid" metric hit a new local high, marking its highest level since August 2022 [00:09:50].
Challenger Job Cuts (May): Corporate job cuts totaled 97,000 for the month, rising by 14,000 month-over-month. On a YTD basis, total corporate cuts stand at 400,000 versus 700,000 last year. The apparent 300,000 drop-off is entirely structural, explained by the severe government DOGE (Department of Government Efficiency) cutbacks enacted the previous year. Stripping those out, private-sector corporate job cut announcements are running 7% lower year-over-year [00:10:25].
Jobless Claims & Sentiment Distortion: Weekly initial claims briefly spiked to a 16-week high, which the hosts dismiss as baseline statistical volatility surrounding the Memorial Day holiday. The core 4-week moving average remains flat, and absolute claims remain stable in the low 200k range (specifically 225k). The hosts critique bearish research analysts for manipulating short-term rolling charts to create an alarmist breakdown narrative where none exists [00:11:00].
Non-Farm Payrolls / Establishment Survey (May): The blockbuster "Jobs Friday" headline non-farm payroll figure printed hot at 172,000—beating consensus estimates by a massive 84,000. Additionally, the previous month's print was heavily revised upward from 115,000 to 179,000. Total net two-month upward revisions added 93,000 jobs, a major reversal from the negative revision trends observed over recent quarters. This pushes the rolling 3-month payroll average to 188,000 (the highest since March 2024). Job growth concentration remains tightly concentrated in three sectors: Leisure & Hospitality (+70k), Government (+52k), and Healthcare & Social Assistance (+47k), which net out to 169,000 of the 172,000 total jobs [00:12:32].
Household Survey & Unemployment Breakdown: The official headline U3 unemployment rate matched expectations exactly at 4.3%, and the Labor Force Participation Rate held firm at 61.8%. Internal micro metrics are broadly healthy: civilian population rose by 100,000, the active labor force expanded by 83,000, total employed individuals grew by 149,000, absolute unemployed numbers fell by 66,000, and part-time employment for economic reasons dropped by 137,000. Conversely, signs of friction appeared in job search durations: the average duration of unemployment stepped up significantly to 26.0 weeks (vs. 21.9 weeks a year ago), and the median duration rose to 11.6 weeks (vs. 9.5 weeks a year ago), meaning it takes roughly an extra month to secure a role once unemployed [00:14:07].
QCEW Revision Disclosures: Lightly reported Quarterly Census of Employment and Wages (QCEW) microdata released during the week reveals that historical US labor markets from April through December of last year were structurally stronger than initial headline data showed, undercounting baseline job accumulation by roughly 25,000 jobs per week [00:17:43].

Rate Hike Probabilities Shift Forward: Due to hot labor market indicators, the macro framework has transitioned to a "good news is bad news" regime for financial assets. The market is now pricing in a 100% probability of a Federal Reserve interest rate hike in December 2026. Looking across the next 12 months, fed funds futures are pricing in a 75% implied probability of two full rate hikes [00:15:35].
The Safety Cut Reversal Debate: Financial institutions are circulating research detailing expectations for three consecutive rate hikes over the next 12 months to fully dismantle the precautionary "safety cuts" implemented earlier by Fed Chair Jerome Powell. Jeff Mayberry considers a three-hike baseline aggressive unless domestic core inflation spins out of control or geopolitical tensions involving Iran trigger major energy supply shocks [00:16:19].
Upcoming Catalyst - Inflation Week:
- CPI (Wednesday, June 10): Consensus forecasts estimate MoM Headline CPI at +0.5% and MoM Core CPI at +0.3%. If realized, this pushes the critical YoY Headline CPI rate up to a hot 4.2% (from 3.8%), with YoY Core CPI projected at 2.9%—far above the Fed's target zone [00:18:48].
- PPI (Thursday): Final demand MoM PPI is forecasted to moderate to +0.7% (down from 1.4% previously), while Core PPI ex-food and energy is expected at +0.5% (down from 1.0%). While easing factory gate prices offer minor relief for upcoming core PCE calculations, they are insufficient to prompt a near-term policy pivot toward rate cuts [00:19:28].
June 17 FOMC Meeting Dynamics: While interest rates are guaranteed to remain unchanged at the June 17 meeting, focus shifts to language adjustments within the formal policy statement. During the prior FOMC meeting, three voting members dissented, demanding a balanced statement that weighs both hikes and cuts equally; analysts anticipate more officials will join this hawkish faction. Furthermore, rumor mills indicate a 50/50 probability that incoming policy advisor Kevin Warsh may suppress or eliminate the Summary of Economic Projections (SEP) "dot plot" entirely, aligning with an internal institutional push to dissolve the practice [00:20:21].

Good News for Labor Proves Bad for Stocks | 6 Jun 2026 | DoubleLine Capital

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