“Jobless claims fell sharply to 730,000 last week, as the pandemic eased a little and winter storms that swept across the country created disruptions,” WSJ writes.
Why It Matters: It’s a better turnout than what was predicted. Economists expected initial unemployment claims to hold steady for the week ending Feb. 20. The broader data says things as a whole are holding steady, “while other readings of the economy have pointed to a pickup.”
Numbers To Consider:
- The Four-Week Moving Jobless Claims Average: 833,000
- It’s held within a range of 750,000 and 850,000 since last October, well above pre-pandemic levels.
- Employers added a net of 49,000 jobs in January. This comes after cutting 227,000 jobs in December.
A Slight Deviation: Winter storms in Texas and elsewhere in the country could affect job trends in the short-term.
- Power outages and disruptions have created temporary unemployment and the inability to file claims.
Looking Ahead: “Through January, the economy had recovered a little more than half of all jobs lost last spring. There are signs this year that economic activity is poised to pick up as Covid-19 cases fall, more people become vaccinated, more government stimulus reaches households, and businesses and states lift restrictions.”
- Economists surveyed by WSJ project employers to add 4.8 million jobs in 2021.
- Job openings at the end of January increased compared to year-before levels, backed by a round of stimulus and accelerated retail spending.
Despite good week-over-week numbers, these jobless claim numbers are still in the same ballpark that we’ve been in since September.
I’m tracking to the news that we’re seeing an inversion in the bond markets’ inflations expectations. The delta between Treasuries yields and TIPS yields show that inflation expectations have risen to 2.1% to 2.4, but the interesting thing is that the market is pricing in higher inflation in the shorter-term than the longer-term. This suggests that inflation is expected to be higher in the shorter term and might not be long-lived.
Regardless, we will be positioning ourselves for higher rates going forward on the Big Board.