We have begun to see the ‘event-horizon’ (Lance Roberts) of an economic slowdown in several indicators. Adding to that, and counter-intuitively perhaps, an unemployment rate this low (4.29%) is a signal to run-away from Stocks and run-to Treasuries.
Historically, unemployment rate lows have occurred at, or very near-to, market inflection points preceding recessions (see green and red hash marks in chart below). The unemployment rate just released on 6/2/2017 at 4.29% is below the average unemployment lows prior to recessions over the last 67 years (4.4%). Also, it is now below the low before the “Great Recession” 10 years ago, at 4.4% in March of 2007. While further improvement in employment is certainly possible, it has become senseless to bet on that it does.
As we have shown before, the yield curve does not need to invert to enter a recession. While that phenomena is a post-World War II normality, it is a post-Depression aberration, and many recession warning indicators are falsely conditioned to look for this first. Be careful!