Jobless Claims Drop Could Be Short-Lived


By Bondsquawk

July 26, 2012

Initial Jobless Claims fell 35K to 353K with the four-week moving average lower by 9K to 367K. According to Deutsche Bank’s Global Markets Research by Joseph LaVorgna, the fall is likely because of mid-year auto retooling and thus there is a fair amount of volatility in the data in July.

Case in point, the average weekly change in initial claims from January through the end of June was +/‐8k; however, the average in July was +/‐32k. As a result, we are not rushing to interpolate the claims numbers into a July payroll forecast, and we are maintaining our forecast of +75k. To be sure, if the four‐week moving average can maintain its current level through August, then we will become more optimistic regarding August payrolls relative to July.

Moving forward Deutsche Bank believes that future labor data could be an important influence on the monetary policies and tools used by the Fed.

We are not anticipating any significant developments on the monetary policy front at next week’s FOMC meeting, because we expect policymakers to wait to digest two more employment reports ahead of the mid‐September meeting. If claims are moving lower and the labor market is showing some signs of strengthening, this could prove sufficient to allay policymakers concerns, thereby averting any further significant easing measures.

If you have any questions or feedback on anything regarding the economy, markets, and bonds, feel free to Contact Us. We would be delighted to respond.

The above content is provided for educational and informational purposes only, does not constitute a recommendation to enter in any securities transactions or to engage in any of the investment strategies presented in such content, and does not represent the opinions of Bondsquawk or its employees.



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