I saw an interesting analysis circulating about April's employment data. Anna Wong noticed something that escapes most analysts' radar: the unexpected strength in employment numbers, despite the unemployment rate having increased. It seems like a contradiction, but it makes sense when you think about it carefully.

The most curious thing is that the transportation sector accounted for more than half of the month's job growth. It's no coincidence — the PMI and regional manufacturing surveys from the Fed confirm it. There is real movement in the data, not just numbers on paper.

This is where it gets interesting for those following the Fed's moves. If the employment growth needed to keep the unemployment rate stable is higher than previously estimated, then economic pressures are different from what we thought. Wong predicts that the Federal Reserve will likely keep rates unchanged at least until the fourth quarter. Only when unemployment rises significantly should we expect a major rate cut — around 50 basis points in a single move.

This outlook of a possible rate cut in Q4 slightly changes the scenario. It means the Fed is playing the growth game for a few more months. If that rate cut really happens when the employment situation deteriorates, then those holding short positions on risky assets could find themselves in a tricky situation before the end of the year.