The Soft-Landing Narrative Is a Comfortable Story. The Data Isn’t Playing Along
Markets are pricing a pristine outcome for an economy that keeps producing inconvenient numbers. Investors should stop assuming the Fed has already won.
The prevailing market narrative — that the Federal Reserve has engineered a soft landing, that inflation is defeated, and that the only question is how many cuts arrive this year — is a comfortable story. It is not, however, the story the data is telling.
Services inflation remains sticky. Wage growth has reaccelerated. The labor market, far from rolling over, has added jobs at an annualized pace above trend for three straight months.
None of this rules out a benign outcome. But the asymmetry of risks — between equity valuations that already price perfection and a macro picture that refuses to fully cooperate — should give thoughtful investors pause.
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