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Initial Claims Hit New Post-Pandemic Low

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We have a few pieces of data today that will help articulate the trajectory of the Great Reopening, and because it’s Thursday, that means Initial Jobless Claims are among them. After seeing nearly 700K new jobs created in the private sector last month in Automatic Data Processing’s (ADP) survey, and tomorrow’s expected 700K for June from the U.S. Bureau of Labor Statistics (BLS), we see a new pandemic low on weekly jobless claims.

Initial Jobless Claims came in at 364K for last week — nicely below the expected 390K and the upwardly revised 415K from the previous week. We had been tracking in the wrong direction of late: after going sub-400K for the first time since the pandemic began, we hit a previous low the week of June 6th at 374K. This new low reaches us as several states have already pulled the $300 weekly stipend for Americans out of work due to the pandemic.

Then again, we see more and more companies raising minimum wages for workers, including Target (TGT - Free Report) , Starbucks (SBUX - Free Report)  and Wayfair (W - Free Report) , which are pulling wages up to $15 per hour, at minimum. Costco (COST - Free Report)  has bumped up its bottom pay to $16 per hour. This, while the official minimum wage in the country wallows at a paltry $7.25, with not enough support in Congress to pass a mandatory $15 per hour that progressives on Capitol Hill want.

Continuing Claims, reporting a week in arrears from new claims, are showing that inching-up we saw over the past couple weeks on Initial: 3.47 million is higher than the upwardly revised 3.41 million the previous week, which is now the official post-pandemic low mark. Going back 12 weeks, we are averaging around 3.6 million longer-term jobless claims per week. Based on Initial Claims figures, we may suggest Continuing Claims will head back down in the coming weeks.

The final read on Markit Manufacturing PMI for June comes out after today’s opening bell, with expectations in-line month over month to 62.6. ISM Manufacturing, also for June, looks to reach 61.0% as consensus, just 20 basis points off the May read. Both would show signs of improving strength in manufacturing overall; any figure north of 50 on either survey would indicate growth. Over 60 would suggest robust growth.

Oil and gas companies across the board and around the world are up in today’s pre-market, just ahead of the OPEC+ monthly meeting, where the largest oil-producing companies outside the U.S. will decide on production policy. Expectations are companies will open the spigots a bit to meet increased demand as the pandemic (hopefully) is on the wane. We also expect to see new numbers on Construction Spending and Motor Vehicle Sales a little later today.

For the first trading day of the second half of 2021, traders are flipping the script in the pre-market: the Dow +80 points and the Nasdaq -10 suggests a rotation back out of high-growth tech and back into undervalued cyclicals returns to the self-regulating the market has engaged in for much of the year so far. The S&P 500 is flat at this hour, looking for its sixth-straight positive close and yet another record closing high.