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Jobless Claims Hit New Covid Lows, ECB Cutting Back

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Thursday, September 9, 2021

As it is Thursday morning, we see new Initial and Continuing Jobless Claims reports out ahead of the opening bell. The good news is: we’re at a fresh new post-pandemic low in new claims, to 310K. This drops 35K from the previous week’s (upwardly revised) 345K. The bad news? There is none. That 345K initial claims headline was the previous post-pandemic low until today’s 310K.

Continuing Claims also hit a new low since Covid-19 wreaked havoc on the U.S. labor force in March 2020: 2.78 million, which is beneath the upwardly revised 2.81 million the previous week. Longer-term jobless claims are reported a week in arrears, so we may expect further improvement next week, according to initial claims data this morning.

Also, it’s been only a couple months since we were still painfully over 400K new weekly jobless claims, 3.3 million on the continuing claims side. So, while we see disappointing results in monthly employment figures from ADP (ADP - Free Report) and the Bureau of Labor Statistics, week by week we are making real, integral, important progress in the labor force. And this, still with nearly 11 million job openings as of July, as per JOLTS data yesterday.

Overseas this morning, we heard from European Central Bank (ECB) President Christine Lagarde, who announced the ECB will be scaling back asset purchases “moderately lower.” Analysts following ECB quantitative easing believe this will be somewhere between EUR 60-70 billion in asset purchases per month. Lagarde also had some words about the Delta variant of Covid, that it “could delay [Europe’s] full reopening.”

Is this the same thing as tapering? No, it isn’t. A tapering scheme would steadily reduce such asset purchases over time, until the economy is completely weaned off the liquidity in the market. In fact, Lagarde agrees with Fed Chair Jay Powell, who has yet to announce any reduction in asset purchases here in the U.S., that the “rise in inflation is transitory.” But the new ECB plan is to reduce these purchases — and then hold them there for an indefinite period.

Meanwhile, September, which had been continuing its reputation as a sapper of market wealth, looks to be rallying from deeper in negative territory earlier in today’s pre-market. Where we were seeing the Dow -45 points, it’s now -20. The S&P 500 was -5 points and has cut that deficit in half. The Nasdaq, taking a pause yesterday from a series of modestly higher record closing levels, went from -10 points 45 minutes ago to +3.5 at this hour, a little less than a half hour prior to the opening bell.

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