The US economy’s slowing.

I assume that’s obvious, but just in case, the evidence continues to pile up. And rates traders are taking note.

In addition to a wholly dispiriting read on the marquee gauge of US manufacturing, Tuesday found the BLS reporting a decline in job openings and an uptick in layoffs, consistent with a narrative that says the labor market’s softening.

Involuntary separations in the JOLTS release (which covers February) were the highest since September and the second-highest in almost two years. Although still elevated by pre-pandemic standards, job openings fell more than expected, to 7.568 million. The openings-to-unemployed ratio slipped to a five-month low, at 1.07.

Do note: That’s a decent place to be. It suggests there’s one open job for every “officially” unemployed American. The Fed spent the better part of two years trying to wrestle that ratio back into better balance after it spiked to 2 (i.e., two open jobs for every unemployed American) as the economy overheated and inflation soared.

The issue now, though, is that we seem to be one or two months away from that metric falling back to levels indicative of more jobless than jobs. That’s disinflationary, but it could also mean slower growth, particularly if layoffs pick up further. Hires were essentially unchanged in Tuesday’s JOLTS release.

The updated figures below, from Nomura’s Charlie McElligott, give you a sense of just how dramatically the US macro zeitgeist has shifted of late. Three months ago (so, pre-Inauguration Day), US rates traders favored a “no landing” scenario for the US, which is to say a situation where the economy performed so well in 2025, alongside sticky inflation, that the Fed either didn’t cut or actually hiked. That was priced at ~40%, while a soft landing (here defined as one or two cuts in 2025) was priced at 28%.

Fast forward to Q2 and “hard landing” — i.e., a Fed that’s forced into five or more cuts in 2025 — is even odds, and “no landing” is out of fashion altogether, where that means traders are assigning very low probabilities to a meaningful re-acceleration for the world’s largest economy.

“The market read is that downside growth risks reign supreme,” McElligott said. “SOFR options implied probability distribution is reflecting increasing odds not just of a deeper slowdown necessitating more cuts, but [of an] outright hard landing with recession potential,” he added.

Following Tuesday’s US data, the Atlanta Fed’s GDPNow tracker tipped a 3.7% contraction for Q1, the worst estimate yet. Notably, the model now includes an alternative metric which adjusts for imports and exports of gold, an effort to address a popular talking point in 2025. That metric also shows a contraction, albeit a far shallower -1.4%.

So, if the question’s whether the most popular “nowcast” was overstating the depth of the latent US downturn, the answer’s “yes.” But if the question’s whether the US economy’s “doing fine” if only you address the gold point, the answer’s “no, not really.”

“It’s becoming increasingly evident that April 2’s ‘Liberation Day’ is not clearing much, if any, event risk,” Charlie went on, in his Tuesday missive. “Instead, it’s being perceived as a spring board for further policy uncertainty [and] this is good for nobody, as [it] ultimately fattens the left-tail, hard landing risk.”