Equites rose yesterday as weekly jobless claims jumped to their highest level since August, exceeding all estimates. Against this backdrop, the market slightly increased its policy easing views for 2024. As noted the other day, since the Fed stated monetary policy will be determined by the statistics, every statistic released has the potential to alter the prevailing narrative. Weekly jobless claims are notoriously volatile.
Yesterday was also a 30-year Treasury auction which saw “good demand,” perhaps the result of recent data suggesting a rate cut can occur in 2024. The auction supported the moderate rally in the Treasury market as yields fell about 3 bps across the spectrum. The ensuing advance in Treasury prices also supported equity prices in the afternoon.
Next week a host of inflation statistics are released including the PPI, CPI and import/export prices. As widely discussed, inflation has been increasing in 2024 at a pace greater than expected, at pace faster than in 2023.
The socio economic and political ramifications of today’s environment is kryptonite for incumbent politicians, a major reason for the President’s slumping poll numbers according to many political scientists on both sides of the aisle. It is almost impossible to explain away and any attempt to do so a large portion of the electorate may believe the Administration is disconnected from reality.
What will happen today?
Last night the foreign markets were up. London was up 0.77%, Paris up 0.75% and Frankfurt up 0.58%. China was up 0.23%, Japan up 0.41% and Hang Seng up 2.30%.
Futures are up about 0.25% on the belief the next move on Fed Funds will be down. The 10-year is off 2/32 to yield 4.47%.
