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Initial Jobless Claims

04/19/2012

Initial jobless claims for the week ending April 14 (as reported on April 19):
 
•    Jobless benefits fell 2,000 to 386,000, failing to beat consensus estimates for a decline to 370,000.
•    Jobless benefits are now at the upper end of this year’s 371,000 to 390,000 range (Figure 1.1).
•    Last week's figure was revised higher, from 380,000 to 388,000.
•    The 4-week moving average is 374,750 – up from last week's 369,250 (Figure 1.2).
•    Continuing claims rose modestly to 3.297 million from last week’s 3.271 million.
   
 
COMMENTARY:  This morning’s report is consistent with a near-term negative “weather payback” trend for the U.S. labor market. My expectations for the monthly jobs report coming out on Friday, May 4, remain muted. Weather payback will negatively impact that report.
 
The FOMC next meets on April 24-25 in what I expect will be a very contentious meeting regarding the June expiration of Operation Twist and an economic recovery that appears to be sputtering.
 
Investors most likely will greet this morning’s initial jobless claims report by bidding up reflation assets in anticipation of further Fed easing. Given the strong earnings reported to date and expectations for continued historically low private sector borrowing costs, my opportunity focus remains in corporate bonds.
 
 
 
Figure 1.1 Initial Jobless Claims, April 2011 to Present

Source: Bloomberg
 
Figure 1.2 Initial Jobless Claims 4-Week Moving Average, April 2011 to Present

Source: Bloomberg

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