Initial claims for unemployment in regular state-run unemployment programs fell to 576,000 last week. Economists had projected 710,000 new claims for the week.
The Consumer Price Index (CPI) rose 0.6% in March from February, the Labor Department reported this morning. Year over year consumer prices are 2.6% higher than they were in March 2020. Economists had projected that the headline CPI would climb 0.5% in March from February and 2.5% year over year. Financial markets shrugged off the numbers.
This isn’t good news for the prospects for a sustained economic recovery in the United States from the pandemic recession of 2020. The 25 biggest U.S. banks reduced their total loan portfolios by 8% in 2021 through March from the same point in 2020, according to the Federal Reserve’s latest weekly survey.
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.
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 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.”
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.
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.
In March the U.S. economy added the most jobs since August, the Labor Department reported this morning. Payrolls increased by 916,000 jobs in the month. (And the Feburary numbers were revised upwards to show a gain of 468,000 jobs.) The combination was enough to send the official unemployment rate to 6.0% from 6.2% in February.
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.
The one certainty in the stock market right now, I’d say, is volatility. Both to the upside and to the downside. So I think we should take what the market is giving us. Using these three moves in the short term.
You can judge the stock market’s mood pretty accurately today, Tuesday, March 30, from just a few price movements. Take a look at the performance of bank stocks, the small cap Russell 2000, the CBOE VIX “fear index,” and technology stocks to see where we’re likely to be headed for the rest of this week.