The Market Today

Jobless Claims Data Hit Pandemic Lows for a Second Week

by Craig Dismuke, Dudley Carter

CORONAVIRUS UPDATE (VS Coronavirus Chartbook – PDF)

Biden Administration Seeking to Increase Adult Vaccinations, Avenues to Use Excess Supply: President Biden discussed the progress on vaccinations in the U.S. on Tuesday. He said the goal to allow small gatherings by July 4th remains on track but there remains a long way to go on vaccinations overall. He noted that a large portion of the U.S. adult population remains unvaccinated and said that his administration is discussing what to do with unused U.S. vaccine supply. The president said employers could receive a tax credit for giving workers time off to get a shot. The president also said he hopes the U.S. can help other countries around the world.

Developments in Europe: Reports indicated that Greece, France, and Italy would all soon loosen restrictions somewhat. However, a ruling in the lower house of the German parliament agreed to give Chancellor Merkel’s administration more power to override state governments to implement tougher restrictions in areas with rising cases. Disagreements between state leaders and the national government led Chancellor Merkel to seek out the greater authority in order to deal with rising cases that have caused strains on German hospitals.


California Noise Distracts from More Upbeat Signal as Initial and Continuing Claims Hit New Pandemic Lows for Second Week: For the first time this week, there is economic data of consequence. And for a second week in a row, initial jobless claims in regular state programs beat expectations. After a big decline in last week’s report, new jobless claims filings fell from 586k (+10k revision) to 547k in the week ended April 17, the lowest since the start of the pandemic and much better than the 610k economists expected. New filings in the emergency PUA program were little changed, up less than 2k to 133k. Continuing claims in state programs also improved, falling from 3.71mm to 3.67mm, also a new pandemic low. Non-seasonally adjusted state-level figures showed the improvement in both new and continuing claims was broad-based.

Total claims in all programs, however, rose 492k in the week ended April 3 on sizeable increases in continuing PUA claims (+265k) and claims in the PEUC program (+448k). Once again, volatility in California’s reported claims disguised actual improvement in both programs in the majority of states. In the PEUC program, only 10 states joined California in reporting an increase. Despite the rise in total claims to 17.4 million, the signal for the labor market’s recovery actually appears to have improved for a second week, a trend consistent with expectations that hiring will pick back up in the weeks and months ahead as more of the economy reopens.

Later Today: Existing home sales data at 9 a.m. CT is expected to show that activity declined (-1.8%) for a second month in March to the lowest level since August (6.11 million annualized units). At 10 a.m., the Kansas City Fed will release its latest manufacturing activity index which economists forecast will improve slightly in April to its highest level on record.


U.S. Equities Dip Overnight After Recovery Wednesday as Investors Eye ECB and U.S. Jobless Claims Amid Corporate Earnings

The major U.S. equity indices gained ground for the first time this week while Treasury yields barely budged after registering big declines on Tuesday. The S&P 500 and Dow posted matching gains of 0.93% while the Nasdaq rallied more than 1.2% despite a drag from shares of Netflix. The streaming company’s stock sank more than 7% as current and forecasted subscriber growth widely missed expectations. Within the S&P 500, a recovery in economically sensitive names led the broad rally that pushed the index back within 0.3% of last Friday’s record high. Treasury yields, however, were mostly stagnant, ending the day within 0.5 bp of where they started. The 10-year yield dipped 0.3 bps to 1.56%.

Investors will be forced to multi-task for the first time this week on Thursday, balancing incoming corporate earnings results with a couple of important economic developments. Prior to the ECB’s latest decision and weekly report on jobless claims in the U.S., global shares had inched up to extend Wednesday’s recovery while U.S. futures had tilted back into negative territory. Global sovereign yields, including U.S. Treasurys, were little changed but leaning higher. As expected, the ECB kept its policy rates and asset purchase programs unchanged and made only minor mandatory changes to its statement. At the last meeting, officials announced they would accelerate emergency asset purchases in the current quarter, in part to address a rise in longer yields. The market response to today’s decision was relatively muted, however, yields had edged up to session highs ahead of President Lagarde’s press conference and the latest U.S. jobless claims data. After another solid claims report, the 10-year yield remained up 1.1 bps on the day at 1.57%.

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