I don’t want to overstate the significance of any one data point or US macro release, particularly not when the monthly jobs report could upend the narrative anew, but between Monday’s ISM manufacturing miss and Tuesday’s update on job openings, the odds of two Fed rate cuts in 2024 were meaningfully higher.

Consider this: With Tuesday’s revisions to March’s job openings tally, unfilled positions are down 754,000 in two months. That’s a pretty big drop considering how far the series had already receded and where we (probably) are in the cycle.

I doubt seriously that openings are going to “normalize” entirely, but after Tuesday’s release I’m inclined to think they might well make it back at least to 2018/2019 levels.

The simple figure above suggests we may be stretching the limits when it comes to pricing fewer job openings as “good” news.

Although the quit rate was unchanged in Tuesday’s JOLTS release, it’s already back to levels witnessed prior to COVID. If past is precedent, the decline probably presages softer wage growth.

This isn’t especially complicated. If there are open jobs everywhere and the quit rate’s high, that means competition for workers is intense and churn commensurately elevated. That, in turn, suggests employers will have to pay up if they want to hold onto the workers they have. If, on the other hand, demand for labor’s receding and fewer workers are quitting, pressure on employers to raise wages is reduced.

The familiar figure above shows a clear connection between the quit rate and the private wages and salaries series from the Fed’s preferred gauge of worker compensation.

In short: The threat of a wage-price spiral is probably gone now. That’s not to suggest inflation — let alone services sector price growth — is necessarily on a sustainable path back to 2%. It’s just to say that wage dynamics are unlikely to be the primary concern going forward, if they’re a concern at all.

The question now is whether equities will still be inclined to a “bad news is good news” interpretation of the incoming data. It’s easy enough to cheer signs of a slowdown when they’re interspersed with evidence that underlying demand remains a semblance of robust. It’s another thing entirely to celebrate a run of lackluster releases that admits of no ambiguity.

Bottom line: The Fed’s probably behind the curve. Again.