The Facts
Global shares slid for a third day on Mon. after US employment data suggested that the Federal Reserve ("Fed") is likely to further increase rates to combat inflation.
The latest US job report released on Fri. reveals that employers added 428K jobs in April; the average hourly earnings rose 5.5% from a year ago, but the total labor force shrank.
The Spin
Pro-establishment narrative
The labor market is clearly out of balance and has become "unsustainably hot." Climbing wages and labor shortages will worsen inflation, and the job report only confirms the need to stay on the path of raising interest rates quickly
Establishment-critical narrative
The Fed is quick to label the job market as too hot in order to justify aggressive monetary tightening. The real issue at hand is a lack of adequate policies to increase the supply of qualified workers. The strong job market should be viewed as an asset, not a liability.
Narrative C
Turbulence is expected in the market, and the recent volatility isn't surprising; markets are simply trying to make sense of a policy environment that they haven't seen in decades - namely, rising interest rates and quantitative tightening.
