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Initial Claims Drop to Lowest Level of 2022

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We have new economic data ahead of the opening bell this Thursday, riding a strong two-day winning streak on the indexes, the latter of which blossomed after market participants absorbed Fed Chair Jay Powell’s comments following the Fed’s 25 basis-point increase yesterday afternoon. But stocks are trading down in the early session.

Initial Jobless Claims came in lower than expected at 214K last week, well off the upwardly revised 229K we saw the previous week. This is the lowest weekly total since the first week of 2022, and appears to finally be flushing the last of the Omicron hit to the labor force that marred much of the first part of the year.

Continuing Claims hit a new post-pandemic low two weeks ago (it reports a week in arrears from Initial Claims) to 1.42 million, below an unrevised 1.49 million the previous week. The previous low in this cycle was the third week in February, 1.47 million — so this move to the downside looks to be establishing a new low in longer-term jobless claims. Very good news for U.S. employment.

Housing Starts for February came in better than expected: 1.77 million versus 1.70 million anticipated, and up nicely from an upwardly revised 1.66 million, for a month-over-month jump of +6.8%. This speaks to continued high demand for new housing, especially post-pandemic.

However, Building Permits last month, while coming in slightly higher than estimates, were still down month over month to 1.86 million from 1.90 million (unrevised) previously. These are still high levels permits — a proxy for future starts — above 1.85 million now for three straight months. We’re still a ways off the all-time highs from back in the mid-oughts, when the housing bubble helped force a global recession.

Philly Fed manufacturing for March was much stronger than anticipated: 27.4 versus 15.0 consensus, up from an unrevised 16.0 in February. While this is well off the highs we saw in April 2021 of 50.2, and even November’s very strong 39.0, we hope to be off the lows we’ve experienced for manufacturing in the U.S.’ sixth-largest city, which occurred in December of last year and February this year. These figures can be volatile month by month, but we can hope for continued growth from here.

Just ahead of the opening bell, the Dow is -160 points, the Nasdaq is -80 and the S&P 500 is -15 points. Indexes are still up for the week after back-to-back strong days. We look to be giving back some of these gains early on. Oil prices are back up +7% so far today, as well. The gap between 10-year and 2-year bond yields is back below 25 basis points at this hour: 2.165% and 1.939%, respectively.

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