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US Jobless Claims Rise Slightly Amid Stimulus Euphoria

by Matt Eidinger | April 1, 2021

Weekly US jobless claims had trouble staying beneath 700,000 last week – and that’s no April Fool’s Day joke.

The greenback fell a modest 10 pips against its norther peer, the Canadian dollar as news hit the wire.

​​​Markets remain occupied with the equity market rally that began yesterday as major news outlets confirmed a second $2 trillion dollar stimulus bill was set for release by the Biden administration.

The Department of Labor reported 719,000 new applications for unemployment insurance nationwide last week, an increase of over 60,000 from last week’s figures, which were revised down to 658,000. This week’s modest rise can likely be attributed to ordinary short-term fluctuations as the less volatile four-week moving average fell to the lowest levels in over a year at 719,000.

Declines in continuing claims figures for a week prior – the week ending March 20 – were modest. According to the report, 46,000 fewer Americans remained in receipt of ordinary unemployment benefits at this time, bringing the total figures down to just under 3.8 million – also the lowest figures since March 2020.

Despite rising US Treasury yields – reaching over 1.7% on the 10-year earlier this week – the US dollar has retraced a bit over the past day and given up some of its weekly gains.

Hopes for a robust economic recovery have taken hold not just in equity markets, but in the fixed income derivatives market as well. According to data from the Chicago Mercantile Exchange, market participants are pricing in a greater than 11% chance of a quarter-point hike in interest rates from the Federal Reserve by the end of 2021.

Already bolstered by a $1.9 trillion dollar stimulus bill signed into law earlier this month and a rapid vaccine rollout of approximately 3 million doses per day, the outlook for the US economy was further buttressed by President Joe Biden’s announcement yesterday of a second spending package – focusing on physical and digital infrastructure spending over ten years – totaling an additional $2.3 trillion dollars.

Although the bill provides for additional taxes to pay for the rapid increase in spending planned, early movement in equity markets appears positive and treasury yields have remained stable as well.

The next phase of Biden’s economic recovery agenda is set for release later in April and will reportedly total an additional $1 trillion. With this in mind, the stage is set for tomorrow’s nonfarm payroll release. According to market consensus, the labor market is expected to have created nearly 650,000 new jobs in March – further bolstering claims of a rapid American recovery amid historic levels of “easy money” splashing around in the economy.

Matthew Eidinger
Market Strategist & Fintech Specialist

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