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Weekly Jobless Claims Rose More Than Expected

Initial Jobless Claims took an unexpected turn upwards this morning ahead of the opening bell, rising by 51K new claims for the week from an upwardly revised 368K the previous week to a headline number of 419K. This is the highest figure we’ve seen since the week on May 16th, and the first time in four weeks we’ve been up over the 400K threshold.

Continuing Claims, reported a week in arrears, did manage to land a fresh post-pandemic low 3.236 million from the previous week’s upwardly revised 3.265 million. And we’re down roughly half a million longer-term jobless claims than we were 10-12 weeks ago, which demonstrates real progress on the labor market front, even if the initial claims headline is disappointing.

Keep in mind, several states around the country had pulled the plug on their unemployment assistance programs as the Great Reopening began to blossom. Perhaps there is still a bit of transitional equilibrium yet to be reached between those seeking work and job openings in particular industries, which would be explained by these policy changes.

We see the best success in employment growth in areas where wage hikes have notably increased. Once employers entice their potential workforce that they can earn more working than from receiving government assistance, even at the risk of slimmer margins if they cannot initially pass along added costs to consumers, their companies tend to prosper. Likely, today’s jobless claims numbers tell the story of a continuing transition toward full employment.

European Central Bank (ECB) President Christine Lagarde is speaking right now in Frankfurt, Germany for its Governing Council policy meeting. In a written statement before her address, the ECB has decided to keep interest rates unchanged or perhaps move them lower until the optimum 2% inflation growth is reached, very similar to U.S. Fed policy of the past year.

The ECB will also keep its Pandemic Emergency Purchase Programme (PEPP) in place until March of 2022 or the pandemic ends, whichever comes first. This amounts to a total of 1.85 trillion euros in asset purchases, about 20 billion euros per month. Currently, Europe is fighting a recent swell in Covid cases, largely due to the rapidly spreading Delta variant, much as we have seen in areas of the U.S. recently.

After the opening bell today, we expect to see new Existing Home Sales numbers for June. Analysts forecast an increase to around 5.9 million seasonally adjusted, annualized units sold last month, up from the 5.8 million reported for May. Also, the Index of Leading Economic Indicators for June comes out later today, expected to dip to +0.9% from the +1.3% reported the previous month.

Our modestly schizophrenic trading activity continues in today’s pre-market, either because the indexes lack direction, want to keep investors guessing, or some combination of the two. In any case, we’re not straying too far in wither direction at this hour: the Dow is -40 points, the Nasdaq is +10 and the S&P 500 is flat.


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