The most anticipated event of this morning is the opening speech at Jackson Hole for the Economic Policy Symposium by Fed Chair Jay Powell, whereby he is expected to point Fed policy in a new direction: from protecting the U.S. economy from inflation to fomenting it, ostensibly in order to help fluff up the economy above its sub-2% rate we’ve been struggling through. He will have a lot to answer for, and some of this may come in the form of new economic data hitting the tape this morning:
New Initial Jobless Claims are out, as nearly every Thursday, with numbers technically better than previously, but not so far as to amount to a blip on the screen: 1.01 million new claims were filed last week, down from the (slightly downwardly adjusted) 1.10 million the week prior, but obviously still over the psychologically cringey million new weekly jobless claims. Continuing Claims reached 14.54 million from the previous week, improving from the slight upward revision of 14.76 million longer-term claims.
So we’re basically “bottoming out” here around a million new claims per month, which is clearly not an optimum situation. By contrast, it leagues better than the 6.87 million we saw posted in late March, but still within the band of “pandemic levels.” How we break out of this appears to be the trick, especially with Covid-19 still omnipresent in the U.S. now and for the foreseeable future. In fact, with no new relief package having yet passed Congress, the worry might be that unemployment figures may go back up from here.
The first revision on Q2 GDP was also better than expected: -31.7% improved on the -32.5% expected and the -32.9% posted initially. Consumption came in at -34.1%, the Price Index -0.2% and Personal Consumption Expenditures (PCE) -1%. Naturally, these are still among the worst levels we’ve ever seen on GDP, whose charts trace back to post-World War II. That said, we may see a big boost in GDP for Q3 on the bounce-back and economic reopening, so investors may see these Q2 figures as “evolving.”
Markets have been buoying right around unchanged all morning. While expectations are for Powell’s address to soothe market anxieties, lots of what he’s expected to say has already been priced into the market. Thus, unless he becomes far more generous with cheap money and backstopping transactions — and it’s hard to see how much more generous he could be — the risk may be to the downside, if he doesn’t fulfill all the expectations of traders who’ve built market indexes up to at or near all-time highs.
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Economic Data Deluge
The most anticipated event of this morning is the opening speech at Jackson Hole for the Economic Policy Symposium by Fed Chair Jay Powell, whereby he is expected to point Fed policy in a new direction: from protecting the U.S. economy from inflation to fomenting it, ostensibly in order to help fluff up the economy above its sub-2% rate we’ve been struggling through. He will have a lot to answer for, and some of this may come in the form of new economic data hitting the tape this morning:
New Initial Jobless Claims are out, as nearly every Thursday, with numbers technically better than previously, but not so far as to amount to a blip on the screen: 1.01 million new claims were filed last week, down from the (slightly downwardly adjusted) 1.10 million the week prior, but obviously still over the psychologically cringey million new weekly jobless claims. Continuing Claims reached 14.54 million from the previous week, improving from the slight upward revision of 14.76 million longer-term claims.
So we’re basically “bottoming out” here around a million new claims per month, which is clearly not an optimum situation. By contrast, it leagues better than the 6.87 million we saw posted in late March, but still within the band of “pandemic levels.” How we break out of this appears to be the trick, especially with Covid-19 still omnipresent in the U.S. now and for the foreseeable future. In fact, with no new relief package having yet passed Congress, the worry might be that unemployment figures may go back up from here.
The first revision on Q2 GDP was also better than expected: -31.7% improved on the -32.5% expected and the -32.9% posted initially. Consumption came in at -34.1%, the Price Index -0.2% and Personal Consumption Expenditures (PCE) -1%. Naturally, these are still among the worst levels we’ve ever seen on GDP, whose charts trace back to post-World War II. That said, we may see a big boost in GDP for Q3 on the bounce-back and economic reopening, so investors may see these Q2 figures as “evolving.”
Markets have been buoying right around unchanged all morning. While expectations are for Powell’s address to soothe market anxieties, lots of what he’s expected to say has already been priced into the market. Thus, unless he becomes far more generous with cheap money and backstopping transactions — and it’s hard to see how much more generous he could be — the risk may be to the downside, if he doesn’t fulfill all the expectations of traders who’ve built market indexes up to at or near all-time highs.