Weekly jobless claims fell for the sixth consecutive week, the longest stretch of declines since 2022. The number of claims was also lower than any estimate.
Treasuries sold off on the news as it again alters the odds of any immediate change in monetary policy with the market now discounting less than two reductions in the overnight rate by year’s end. How will this data influence next week’s release of July’s BLS employment data?
Several months ago, “it was a forgone conclusion” that unemployment was going to rise. What gives? Are the models wrong? Has the economy changed that dramatically? Are the sampling techniques flawed? Probably all of the above. The unexpected is now the expected.
Equites were mixed yesterday. TSLA fell about 9% as its report missed estimates. GOOG was mixed even though its results exceeded expectations, perhaps under the guise that shares are priced to perfection, permitting little margin of error. Some are concerned about its massive expenditures on AI and whether or not they may generate the intended returns.
What will happen today? Will trading be subdued waiting for next week’s events including the release of earnings from several mega caps, a FOMC meeting, initial estimates of 2Q GDP and July’s employment data?
Last night the foreign markets were down. London was down 0.35%, Paris down 0.03% and Frankfurt down 0.68%. China was down 0.33%, Japan down 0.88% and Hang Seng down 1.09%.
Futures are flat ahead next week’s data dump and FOMC meeting where the Committee is expected to maintain a hawkish tilt. The 10-year is off 3/32 to yield 4.41%.
Kent Engelke
Chief Economic Strategist Managing Director
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