Challenging jobs data

Jawbs

That’s quite an interesting Challenger hires and layoffs number this morning. For me, the Challenger number is normally a pass, because pervasive YoY base effects in the data make the headline number meaningless. But we are currently right in the worst part of the data blackout, sans NFP etc., and so the BLS can no longer corner the market on labor market data. Challenger and Gray report layoffs, and that’s the number you will usually see on the wires, but this morning Phil informed me that they also report hires.

In this chart, you can see the rolling 12-month hires minus fires, looking back over the last twenty years. It’s a decent chart that shows net hiring negative, casting a spotlight on job weakness. After manic overhiring in 2021/2022, many are now losing their jobs, according to this data. I use 12-month cumulative performance in my charts today because the data is not seasonally adjusted. If job doom is your religion, this chart is a prophecy of imminent flood.

It would make sense to overlay this with the 12-month average of NFP and see how it fits. So, I did that and the chart is here. The fit is reasonable.

Challenger data is much noisier than NFP, and thus there’s some risk I am overhyping this. I would trust NFP much more, but we don’t have NFP. So there.

My bias is always to assume that the soft landing will continue, so I am definitely not sitting here biased, trying to find a bearish spin on this data. I just put it in the blender and this is how it popped out. It looks pretty bad! If you have any information or opinions on why this data might not be useful, please let me know.

Here is the breakdown of the layoffs data by industry (they don’t break down the hiring). It’s noisy, but you can see tech layoffs in 2023 never really stopped and government layoffs have skyrocketed in 2025 (naturally).

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FX

The price action in the USD is super interesting as it trades poorly right at the moment when positioning data shows a flip from short USD to long USD and some of the most famous strategists are throwing in the towel on the USD bear story. Robin Brooks even published a note about the end of the euro! Things you don’t see at the highs in EURUSD.

On top of that, you got an okay ADP, a stonking ISM, and substantial demand for USD at WMR and yet:

Good news/bad price right after the final capitulation by USD shorts is eye-opening. Furthermore, as discussed in many Bloomberg chats on Tuesday and in am/FX yesterday, a falling NASDAQ relative to the rest of the world should not really be USD bullish! Perhaps what we saw during Tuesday’s bout of risk aversion was a final round of angry folding by the last of the dollar shorts. The next time the NASDAQ drops 4% in one day, I would think USDJPY and USDCHF go lower, not higher. Tuesday was an aberration.

I cancelled my “sell EURUSD on the rally idea” from the sidebar as my USD bullish view initiated 22OCT has now expired. Price action is bearish USD, but I have no reason to sell down here. I am agnostic and wonder if the USD buyers are finally done.

My AUDNZD trade is doing nothing so far and that is par for the course. AUDNZD is boring, but sometimes patience pays off. Jas correctly points out that we are entering a slow period for Kiwi data, too. This setup screams “sell call spreads” and if you are the kind of person that likes to do boring, positive EV trades with no leverage, this is an idea for you. For context, if you sell a 2-month 1.1500/1.1550 AUDNZD call spread, you will receive around 16bps. Your worst case is you lose 27.4bps. It’s boring and it’s not levered, but there are many, many paths where you make money and I think AUDNZD doing nothing or going lower is the play.

Stand in the place where you work. Now, face West.

Yesterday I wrote:

“The big bank strategists are losing their religion on the USD short trade, too, in another sign of capitulation.”

I was subsequently informed that “losing one’s religion” actually means:

Losing your temper, patience, or composure, feeling so frustrated or upset that you might say or do something that you normally wouldn’t.

R.E.M. frontman Michael Stipe explained the 1991 song is about “losing your temper or being at the end of your rope,”

Thanks Clark!

good luck ⇅ be nimble