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Jobless Claims Creeping Up: 235K Last Week

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Thursday, July 7, 2022

What we’ll still consider a “bear-market bounce” amid our current circumstances continues into today’s pre-market trading, where we’re into the green across the board after a marginal up-day Wednesday. The Dow blue-chips are +180 points at the hour, the tech-heavy Nasdaq is roughly +55 and the S&P 500 is +18 points at this hour.

New jobless claims data has hit the tape, as we see virtually every Thursday morning, with our ongoing narrative continuing from our past month-plus: 235K Initial Jobless Claims last week rose 4000 from the previous week’s 231K — the fifth straight week at or above 230K new jobless claims, which asserts a flattening after a 50-plus-year low registered in May.

The good thing is we’ve not (yet) seen new claims yank the chart notably higher, toward 250K or 300K initial claims per week, which would indicate mass layoffs hitting the labor market. We may yet get there as we see the Fed tightening into recessionary conditions going forward, but as of now, 235K initial claims is still a manageable level as far as the overall economy is concerned.

Continuing Claims did bounce higher this morning, however. Reported a week in arrears from new claims, we see a headline of 1.375 million from two weeks ago — 51K higher than the previous week, and only six weeks removed from the 1.306 million headline which reached lows not seen since the Rolling Stones were in their 20s. It’s the highest level since late April, with the trajectory going in the total opposite direction.

We’ll get even more clarity on employment conditions tomorrow morning from the nonfarm payroll report from the U.S. government for the month of June. Expectations are for 250K new jobs having been created last month, well off the 390K pace we’d seen the prior month and down considerably from the halcyon months of most of the past year, which averaged well over half a million jobs per month. This is yet another indication we’re moving from the Great Reopening to something else.

Foreign Trade Balance for May came in at -$85.55 billion — better than the improved revision to -$86.7 billion the last time around but still deeper than expected. Four of the past five months have shown our international trade balance within a narrow range, although the March 2022 number hit an all-time record high (low?) -$107.7 billion, which on the bar chart resembles an upside-down middle finger. Commodity prices, particularly oil & gas, likely have a lot to do with these numbers.

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