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New Jobless Claims Lower: 222K; Powell Starts Q&A

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Thursday, September 8, 2022

New Jobless Claims have hit the tape ahead of today’s opening bell, as they do nearly every Thursday morning, and the results are either good or bad, depending on your perspective — even if they are not game-changing, regardless which way you’re looking at it. Initial Jobless Claims reached 222K last week, -6K from the downwardly revised 228K the previous week. This is the lowest weekly headline level since the 202K we saw back ahead of Memorial Day.

I say “depending on your perspective” because low jobless claims represent tightness in an already-tight labor market, which is what the Fed would like to see gain a little slack in order to fight inflation. Thus, initial claims might be considered “good news is bad news,” if you consider a 75 basis-point (bps) Fed funds rate hike two weeks from yesterday “bad news.” You may just consider it a reality that the markets have been baking into the cake over the past 10 sessions or so.

Continuing Claims, posted a week in arrears from initial claims, rose to 1.473 million two weeks ago from 1.437 million the week prior to that. Historically, this still illustrates an overall healthy employment situation, but it is the highest weekly print in the last 12 weeks — also the highest read since prior to the summer months. And while this might equate to “bad news is good news” for the same reason indicated above, consider new jobless claims are forward indicators (to an extent) of longer-term claims. Therefore, we may expect a drop in this metric come next week.

A Q&A with Fed Chair Jay Powell has just begun, so market participants will be paying close attention to the words he uses to describe the Fed’s thinking regarding economic developments at this stage. We may hear him speak on the 75 bps rate hike we saw from the European Central Bank (ECB) this morning (a deeper cut than the 50 bps many analysts were expecting). Powell is unlikely to telegraph the extent of the Fed’s pending rate hike on September 21st, but if he lets it slip, you know it won’t get past investors.

Meanwhile, that zero-balance the market was experiencing only minutes ago has shot down to negative triple-digits (-130 points) on the Dow, -20 points on the S&P 500 and -85 points on the Nasdaq. It seems like even Powell’s appearance these days puts a queasy feeling into the stock market’s collective stomach. Perhaps he can offer some soothing relief. Tuning in now…

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