Morning Briefing

Show us the jobs, Federal Reserve says, before any interest rate increase

We want to see the job gains before we remove any support for the economy, Federal Reserve Chairman Jerome Powell said at an event at the International Monetary Fund, on Thursday, April 8. Putting another marker in the ground on when the central bank might start to cut back on its schedule to purchase $120 billion a month in Treasuries and mortgage-backed securities–and then to raise its benchmark interest rate, Powell said the Fed wants to see a string of months like March when the economy added 916,000 jobs.

New claims for unemployment up again this week

New claims for unemployment up again this week

Initial claims for unemployment in regular state programs rose by 16,000 to 744,000 in the week ended April 3, the Labor Department reported today, April 8. This was the second straight weekly increase in new claims. For the prior week, the total new claims figure was revised upward to 728,000. Economists surveyed by Bloomberg had projected that initial claims for the week would fall to 680,000.

Nothing in the Federal Reserve minutes released today to pause financial markets.

Nothing in the Federal Reserve minutes released today to pause financial markets.

Nothing to see here. Move along. In the minutes from its March 16-17 meeting, released today April 7, Federal Reserve officials told the financial markets “that it would likely be some time until substantial further progress toward the [Open Market] Committee’s maximum-employment and price-stability goals would be realized.” And, the minutes went on, “a number of participants highlighted the importance of the Committee clearly communicating its assessment of progress toward its longer-run goals well in advance of the time when it could be judged substantial enough to warrant a change in the pace of asset purchases.”

Bond traders speculate that the bond “lull” won’t last long–and that yields will spike again

Bond traders speculate that the bond “lull” won’t last long–and that yields will spike again

A significant number of bond traders are betting that the calm in bond markets won’t last. Short interest in the $14 billion iShares 20+ Year Treasury Bond ETF (TLT) has climbed to about one-fifth of shares outstanding, the highest since early 2017, according to IHS Markit. Bearish bets, Bloomberg reports, have risen from just 7% at the start of 2021.

Surge in services activity adds to stock rally

Surge in services activity adds to stock rally

Stocks are up strongly this morning (April 5) on delayed buying after Friday’s huge jobs gains for March (the stock market was closed for Good Friday) and on very good news from the service sector of the U.S. economy in the March survey from the Institute for Supply Management.
The ISM’s non-manufacturing activity index rebounded to 63.7 in March. That’s the higher level in the survey’s history and comes after a reading of 55.3 in February.

New claims for unemployment up again this week

New claims for unemployment disappointingly high

The number of workers filing new claims for unemployment unexpectedly jumped for the week ended March 27. The rise to 719,000 initial claims for unemployment was a surprise after last week when the total dropped to a revised 658,000. That was the lost weekly total since the pandemic shutdowns started in March 2020.