The biggest economic data day of the week (so far — ahead of tomorrow morning’s Personal Consumption Expenditures [PCE] report) is today, with jobless claims, quarterly Gross Domestic Product (GDP) and Philadelphia manufacturing reports all out an hour prior to the opening bell. In summation, results in the markets have been to drive higher while yield rates on 2-year and 10-year Treasury bonds have been falling.
The second (and final) Q3 GDP revision comes back to where we started in the initial read: +4.9%. This is 30 basis points (bps) below the last print, which was higher than the first revision. It also “seems” more correct: while it was nice to see a 5%+ GDP number for last quarter, considering how consumers treated the economy with such trepidation, those higher GDP numbers didn’t seem to ring as true. In any case, it’s +4.9%, and that’s that. Not too shabby.
The Consumption level for Q3 reached a quite healthy +3.6% — more than double what we saw in Q2. Core quarter-over-quarter came in at +2.3%, the lowest rate of change since +1.8% back in Q2 2020, which was basically peak Covid. If we’re looking for a reason why the Fed can be confident that lowering interest rates wouldn’t bring inflation roaring back right away, we can find it in this historically low figure. Ex-food & energy? Even lower: +2.0%. That is the Fed’s optimum rate of inflation.
Initial Jobless Claims remained impressively low: 205K — 10,000 fewer than anticipated, though 2000 higher than the previous week’s slight upward revision. Though we saw various periods in the past year that saw new jobless claims push above 240K, we’ve come back down in a real — and lasting — way: over the last quarter of 2023, we’ve averaged around 220K new jobless claims, which is historically low. And over the past few weeks, we’ve even been lower than that.
Continuing Claims came in exactly where last week’s print did: 1.865 million, which is now slightly lower than the upwardly revised 1.866 million (longer-term claims are reported a week in arrears from new claims). Here’s where we thought we were seeing some real weakness in the labor market: from mid-October, when we breached 1.8 million longer-term jobless claims since April, it looked like we were headed to 2 million. We may yet be, but we remain decidedly south of that number. And 2 million continuing claims per week is still not a crisis level for employment.
The fly in the ointment this morning came from December Philly Fed: -10.5, which is more than twice as low as the expected -4.0, and the worst print since -13.5 in September. Philly Fed has been in a bad way for a while now: 14 of the past 16 months have posted negative headline numbers — just one in the past year (August). We thought we’d been building back toward breakeven with November’s -5.9, but now we’re playing chutes and ladders with manufacturing productivity in the sixth-largest city in the U.S.
Altogether, this has brought pre-market futures out of its doldrums that set in yesterday afternoon: ahead of this bevy of reportage, the Dow was +150 points, the S&P 500 +20 and the Nasdaq +110 points. As of now, the Dow is +225 points, the S&P +30 and the Nasdaq +170 points. Bond yields entered the economic news at 4.33% on 2’s and 3.85% on 10’s; since then, 4.307% on 2’s and 3.834% on 10’s. These figures are already well off the 5%+ numbers we were seeing as recently as Halloween. Season’s Greetings! Let’s bring on Santa!
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Jobless Claims Come in Slightly Below Expectations
The biggest economic data day of the week (so far — ahead of tomorrow morning’s Personal Consumption Expenditures [PCE] report) is today, with jobless claims, quarterly Gross Domestic Product (GDP) and Philadelphia manufacturing reports all out an hour prior to the opening bell. In summation, results in the markets have been to drive higher while yield rates on 2-year and 10-year Treasury bonds have been falling.
The second (and final) Q3 GDP revision comes back to where we started in the initial read: +4.9%. This is 30 basis points (bps) below the last print, which was higher than the first revision. It also “seems” more correct: while it was nice to see a 5%+ GDP number for last quarter, considering how consumers treated the economy with such trepidation, those higher GDP numbers didn’t seem to ring as true. In any case, it’s +4.9%, and that’s that. Not too shabby.
The Consumption level for Q3 reached a quite healthy +3.6% — more than double what we saw in Q2. Core quarter-over-quarter came in at +2.3%, the lowest rate of change since +1.8% back in Q2 2020, which was basically peak Covid. If we’re looking for a reason why the Fed can be confident that lowering interest rates wouldn’t bring inflation roaring back right away, we can find it in this historically low figure. Ex-food & energy? Even lower: +2.0%. That is the Fed’s optimum rate of inflation.
Initial Jobless Claims remained impressively low: 205K — 10,000 fewer than anticipated, though 2000 higher than the previous week’s slight upward revision. Though we saw various periods in the past year that saw new jobless claims push above 240K, we’ve come back down in a real — and lasting — way: over the last quarter of 2023, we’ve averaged around 220K new jobless claims, which is historically low. And over the past few weeks, we’ve even been lower than that.
Continuing Claims came in exactly where last week’s print did: 1.865 million, which is now slightly lower than the upwardly revised 1.866 million (longer-term claims are reported a week in arrears from new claims). Here’s where we thought we were seeing some real weakness in the labor market: from mid-October, when we breached 1.8 million longer-term jobless claims since April, it looked like we were headed to 2 million. We may yet be, but we remain decidedly south of that number. And 2 million continuing claims per week is still not a crisis level for employment.
The fly in the ointment this morning came from December Philly Fed: -10.5, which is more than twice as low as the expected -4.0, and the worst print since -13.5 in September. Philly Fed has been in a bad way for a while now: 14 of the past 16 months have posted negative headline numbers — just one in the past year (August). We thought we’d been building back toward breakeven with November’s -5.9, but now we’re playing chutes and ladders with manufacturing productivity in the sixth-largest city in the U.S.
Altogether, this has brought pre-market futures out of its doldrums that set in yesterday afternoon: ahead of this bevy of reportage, the Dow was +150 points, the S&P 500 +20 and the Nasdaq +110 points. As of now, the Dow is +225 points, the S&P +30 and the Nasdaq +170 points. Bond yields entered the economic news at 4.33% on 2’s and 3.85% on 10’s; since then, 4.307% on 2’s and 3.834% on 10’s. These figures are already well off the 5%+ numbers we were seeing as recently as Halloween. Season’s Greetings! Let’s bring on Santa!