Thursday, January 6, 2022
Markets will try to put the pieces back together after breaking apart on Wednesday’s news that the Fed, in the minutes of its latest meeting released yesterday, is discussing a more aggressive monetary policy than originally understood. Treasury bond yields jumped and market indexes — suddenly considered overbought — began selling heavily into the final hour of regular trading.
This morning, we’re seeing a 10-year yield above 1.7% and a 2-year above 0.8%, which are the highest reads we’d seen in several months. On the Dow 30 index, following a -1% loss on the Fed minutes, the index is trying to climb back in the pre-market, +93 points at this hour. The Nasdaq, on the other hand, which dropped -3.3% Wednesday, is down -75 points. The S&P 500, which fell -2% yesterday, is flat currently.
Basically, we’re looking at a wake-up call that the Fed is not going to stay dovish on monetary policy, especially with inflation looking to stick around in the economy longer than Fed Chair Powell initially had expected. From the right angle, this looks like a good thing: if we don’t wish to see inflation run rampant as it had 40 years ago, the Fed needs to be proactive in working to end asset purchase programs, potentially raise interest rates and, as we heard yesterday, shrink the $9 trillion balance sheet.
Initial Jobless Claims bumped up a tad from the previous week and from projections: 207K was 12K new claims higher than expected and above the upwardly revised 200K reported the week prior. Though it’s more psychologically pleasing to be beneath 200K on new claims, these are still historically strong numbers. Plus, we’re dealing with seasonal static — temporary hires over the holidays, etc. — that makes this data a shade less important.
Continuing Claims also ratcheted up a tad: 1.754 million was above the estimate of 1.72 million, and more than the 1.718 million from the previous week, which still represents a pandemic low. Seeing as longer-term jobless claims are reported a week later than new claims, we may expect these figures getting higher next week, as well. But again, historically we’re still in very good shape.
The U.S. Trade Deficit for November delved deeper, as expected, to -$80.2 billion from -$67.2 billion in October, which was the best deficit read since the spring. This latest print is the deepest deficit since the record -$81.4 billion in September, but it’s not as bad as the -$85 billion expected. Imports and Exports both reached all-time highs: $304.4 billion and $224.2 billion, respectively. As always, we’ll keep an eye on this space. That we didn’t set a new depth for November is somewhat positive.
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Jobless Claims 207K, Up Slightly from Pandemic Lows
Thursday, January 6, 2022
Markets will try to put the pieces back together after breaking apart on Wednesday’s news that the Fed, in the minutes of its latest meeting released yesterday, is discussing a more aggressive monetary policy than originally understood. Treasury bond yields jumped and market indexes — suddenly considered overbought — began selling heavily into the final hour of regular trading.
This morning, we’re seeing a 10-year yield above 1.7% and a 2-year above 0.8%, which are the highest reads we’d seen in several months. On the Dow 30 index, following a -1% loss on the Fed minutes, the index is trying to climb back in the pre-market, +93 points at this hour. The Nasdaq, on the other hand, which dropped -3.3% Wednesday, is down -75 points. The S&P 500, which fell -2% yesterday, is flat currently.
Basically, we’re looking at a wake-up call that the Fed is not going to stay dovish on monetary policy, especially with inflation looking to stick around in the economy longer than Fed Chair Powell initially had expected. From the right angle, this looks like a good thing: if we don’t wish to see inflation run rampant as it had 40 years ago, the Fed needs to be proactive in working to end asset purchase programs, potentially raise interest rates and, as we heard yesterday, shrink the $9 trillion balance sheet.
Initial Jobless Claims bumped up a tad from the previous week and from projections: 207K was 12K new claims higher than expected and above the upwardly revised 200K reported the week prior. Though it’s more psychologically pleasing to be beneath 200K on new claims, these are still historically strong numbers. Plus, we’re dealing with seasonal static — temporary hires over the holidays, etc. — that makes this data a shade less important.
Continuing Claims also ratcheted up a tad: 1.754 million was above the estimate of 1.72 million, and more than the 1.718 million from the previous week, which still represents a pandemic low. Seeing as longer-term jobless claims are reported a week later than new claims, we may expect these figures getting higher next week, as well. But again, historically we’re still in very good shape.
The U.S. Trade Deficit for November delved deeper, as expected, to -$80.2 billion from -$67.2 billion in October, which was the best deficit read since the spring. This latest print is the deepest deficit since the record -$81.4 billion in September, but it’s not as bad as the -$85 billion expected. Imports and Exports both reached all-time highs: $304.4 billion and $224.2 billion, respectively. As always, we’ll keep an eye on this space. That we didn’t set a new depth for November is somewhat positive.
Questions or comments about this article and/or its author? Click here>>