In June, there were 7.437 million job openings, just below the expected 7.500 million. This is the lowest level since April 2025. The previous month’s job openings were revised down from 7.769 million to 7.712 million, and the vacancy rate decreased from 4.6% to 4.4%. In terms of hires, there were 5.2 million, with a rate of 3.3%, which showed little change from May. However, the arts, entertainment, and recreation sector lost 42,000 jobs.

Total Separations

Total separations were 5.1 million, with a rate of 3.2%, similar to last month. State and local government education saw a drop of 39,000 jobs, and the federal government cut 20,000 positions. Voluntary quits were 3.1 million, at a rate of 2.0%, slightly down from May’s 2.1%. There was a loss of 114,000 jobs in professional and business services, while state and local government education and the federal government decreased by 20,000 and 5,000, respectively. Layoffs and discharges remained steady at 1.6 million, with a rate of 1.0%, unchanged from May. There were 35,000 fewer jobs in arts, entertainment, and recreation, along with a decrease of 19,000 in state and local government education. Other separations stayed at 314,000, stable from May. This report indicates that the labor market is losing some momentum. Job openings fell below estimates and reached their lowest level since April. The quits rate, which reflects worker confidence, also decreased slightly. While this is not a crisis, it shows a controlled cooling that we expected.

Federal Reserve and Market Response

This softening trend is what the Federal Reserve aims to see. The recent June Consumer Price Index report shows inflation cooling to an annual rate of 2.8%, and this weak job data gives the Fed a reason to ease policy. We believe this makes a case for a rate cut at the September meeting more likely. As a response, we are considering derivatives that benefit from falling interest rates. We plan to invest in Secured Overnight Financing Rate (SOFR) futures for the fourth quarter, and we expect options on long-duration bond ETFs to perform well, especially by positioning for higher prices. For the equity markets, this strengthens the idea that “bad news is good news” for now. As long as the data suggests a soft landing instead of a severe recession, we expect less market anxiety. We plan to sell volatility by writing out-of-the-money call options on the VIX. This situation is similar to late 2023 when weaker labor data was seen positively as a sign of potential Fed easing. The current report shows that the ratio of job openings to unemployed persons has fallen to 1.4, which is much healthier than the 2.0 level during the peak inflation years. As a result, fed funds futures now indicate over a 75% chance of a quarter-point rate cut by the end of September. Create your live VT Markets account and start trading now.

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