Instant View: Weekly jobless claims fall relieve recession-wary markets
2024.08.08 09:13
(Reuters) – A drop in the number of Americans applying for unemployment benefits last week relieved markets that had been in a near panic about prospects for a recession and how aggressive the Federal Reserve would have to be in easing policy.
Initial claimsfor state unemployment benefits fell 17,000 to a seasonally adjusted 233,000 for the week ended Aug. 3, the Labor Department said on Thursday, the largest drop in about 11 months. Economists polled by Reuters had forecast 240,000 claims for the latest week. The data suggested fears the labor market is unraveling were overblown and the gradual softening in the labor market remains intact.
The government’s monthly nonfarm payrolls report on Friday showed job gains slowed markedly in July and the unemployment rate rose to 4.3%, raising fears in markets that the labor market may be deteriorating at a pace that would call for strong action from the Fed.
MARKET REACTION:
STOCKS: E-minis extended gains and were up 0.76%BONDS: The yield on benchmark U.S. 10-year notes rose to 3.99%, the two-year note yield jumped to 4.044% FOREX: The turned 0.27% higher
COMMENTS:
THOMAS HAYES, CHAIRMAN, GREAT HILL CAPITAL LLC, NEW YORK
“Since the jobs report on Friday, everyone’s been nervous about a recession with the Sahm Rule triggered. The initial jobless claims came in lower than expected, alleviating some of the fear that the labor market was completely rolling over.”
“We have a reasonably robust economy and not an imminent recession, so we can wait a few more weeks for that final first cut from the Fed.”
IAN LYNGEN, HEAD OF US RATES STRATEGY, BMO CAPITAL MARKETS (emailed note)
“The drop in initial filings was larger-than-anticipated and the resulting price action suggests the update is being interpreted as evidence that the labor market remains on solid footing despite the July BLS report. Overall, the lack of information suggesting a further deterioration of the employment landscape was the most relevant takeaway from the final data release of the week.”
MARC CHANDLER, CHIEF MARKET STRATEGIST, BANNOCKBURN GLOBAL FOREX, NEW YORK
“When it comes to the labor market, it’s multi-dimensional. There’s not one number. And so I think that the weekly jobless claims is one of those numbers. Today is a little bit softer, I think, than people expected, but the four-week moving average still moves higher.”
“The talk of an imminent recession seems wide of the mark.”
