Dow gave back 33, decliners over advancers 5-2 & NAZ retreated 120. The MLP index declined 2+ to the 174s & the REIT index fell 5+ to the 485s. Junk bond funds were off a tad & Treasuries are being purchased, bringing lower Treasury yields. Oil slid back to the 71s & gold fell 6 to 1779.
AMJ (Alerian MLP index tracking fund)
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The number of Americans filing for unemployment benefits last week tumbled to the lowest level in more than ½ a century, the latest sign the labor market is bouncing back from the coronavirus pandemic. Figures released by the Labor Dept show that applications for last week dropped to 184K from an upwardly revised 227K a week earlier, easily beating the 220K forecast. It marked the lowest level for jobless claims since 1969, when it was 182K. Continuing claims, or the number of Americans who are consecutively receiving unemployment aid, fell to 1.99M for the latest week, an increase of 38K from the prior week. The report shows that roughly 1.95M Americans were collecting jobless benefits for latest week, a decrease of 350K from the previous week; by comparison, just a little over one year ago, an estimated 19.6M Americans were receiving benefits. One reason for the larger-than-expected dip is the difficulty in adjusting the raw data for seasonal modifications around the holidays. On an unadjusted basis, initial claims actually climbed by about 64K to 281K. Still, the report underscores a strengthening labor market as the economy recovers from the pandemic & Americans venture out to travel, shop & eat. Businesses have struggled to keep up with the demand, however & have reported difficulties in onboarding new employees. Today's report suggests that companies are making an effort to retain the workers they already have.
Jobless claims plunge to lowest in more than 50 years
The price of goods online reached a record high in Nov, according to Adobe. Prices
rose 3.5% compared to a year ago, which is the highest year-over-year
increase since 2014 when Adobe started tracking how much consumers are
paying for goods online. 11 out of the 18 product categories that are tracked by the Adobe Digital Price Index saw year-over-year price increases. The apparel category saw the biggest jump with prices increasing
17.3% compared to a year ago, according to the data. On a month-to-month
basis, apparel prices only dipped 4% even with holiday discounts
kicking in, according to Adobe's data. Although apparel prices rose faster than any other category, it's not the only product that saw a surge in price online.
Online inflation hits record high in November, apparel sees highest jump
The US will raise rates Q3 of next year, earlier than expected a month ago, according to economists in a poll who mostly said the risk was that a hike comes even sooner. That shift in expectations for lift-off to Q3 from Q4 next year was driven by persistently higher inflation & now brings their views almost in line with market pricing. However, rising COVID-19 cases around the world & the emergence of the Omicron coronavirus variant, along with renewed restrictions in some countries underscore that the pandemic is not yet over. Still, the Dec 3-8 poll predicted the Fed would raise rates by 25 basis points to 0.25-0.50% in Q3 2022, followed by 3 more hikes - in Q4 next year along with Q1 & Q2 of 2023. The fed funds rate was expected to reach 1.25-1.50% by end of 2023. The timing shift to Q3 of next year was also underpinned by Fed Chair Jerome Powell saying the central bank would discuss in Dec whether to end its $120B in monthly bond purchases a few months sooner than anticipated. Previous expectations were for it to end in mid-2022. More than 60% of respondents to an additional question, 22 of 35, said the program would end by Mar. More than 80% of respondents, 30 of 36, said the risk to the timing of the first hike in this cycle was that it comes earlier. 16 said a hike could come in the Q2-2022 & 5 said it could come as early as next qtr. Just a month ago only 5 economists said the Fed should hike in Q2 next year & 4 said Q1. Economists were split on the biggest downside risk to the US economy next year with 18 of 36 saying new coronavirus variants & 15 choosing high inflation. Participants in the poll expect the core personal consumption expenditures (PCE) price index, the Fed's key inflation gauge, to stay above 4% this qtr & next - double the 2% target - before slowing in the H2-2022 along with growth.
Fed to lift rates in Q3 next year, but risk comes sooner: poll
The important message from the claims data is that the economy is pretty much at full employment. Period. Also, the unemployment rate, while not at the lowest rate, is not very far away. Meanwhile lower interest rates are coming soon & that will be a big driver for the stock market.
Dow Jones Industrials
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