Thursday, April 8, 2021

Markets drift sideways as jobless claims rise

Dow fell 26. decliners slightly ahead of advancers & NAZ gained 98.  The MLP index lost 1+ to the 167s & the REIT index was off a tad at 411.  Junk bond funds were little moved & Treasuries saw cautious buying.  Oil drifted lower in the 59s & gold jumped 17 to 1759.

AMJ (Alerian MLP index tracking fund)








CL=FCrude Oil59.32
   -0.45 -0.8%







GC=FGold   1,756.60
+15.00+0.9%






 




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The number of Americans filing first-time unemployment benefits unexpectedly rose last week, according to the Labor Dept.  Data showed 744K Americans filed first-time jobless claims last week.  The forecast wase expecting 680K filings.  The previous week's total was revised higher by 9K to 728K.  Continuing claims for the week, meanwhile, fell to 3.734M from the prior week's downwardly revised 3.75M.  The forecast expected the number of continuing claims to decline to 3.65M.  The unexpected increase in initial jobless claims comes after the Mar nonfarm payroll report showed signs the labor market is healing.  Employers added 918K jobs last month as the unemployment rate fell to 6%, its lowest level since the onset of the COVID-19 pandemic.   Economists are forecasting the economy could add more than 1M jobs for each of the next several months. 

744,000 Americans file for first-time jobless benefits

US consumer borrowing accelerated in Feb & consumers started to use their credit cards again as economy recovered from the coronavirus pandemic, according to Federal Reserve data.  Total consumer credit at a 7.9% an annual growth rate, after remaining flat in Jan.  The forecast was for a much smaller increase.  Revolving credit, like credit cards, jumped at a 10.1% rate, reversing last month’s 10.6% decline.  That's only the 2nd month credit card balances had increased since the pandemic began.  TJ Connelly, head of research at Contingent Macro, said some of the increase was likely due to the severe cold weather in Feb.  Consumers tend to use the credit cards more during emergencies, he added.  Nonrevolving credit, typically auto & student loans, rose 7.3% in Feb after a 3.3% rise in the prior month.  This category of credit is much less volatile.  It only fell briefly at the start of the pandemic before returning to steady growth.  The data does not include mortgage loans, which is the largest category of household debt.

U.S. consumer credit picks up in February

Policymakers & central banks need to be “very selective” with stimulus measures to avoid endangering global economic growth over the medium term, according to a top official at the IMF, with a debt overhang & financial vulnerabilities identified as possible risks.  The warning comes as the IMF appears to be trying to orchestrate a delicate balancing act at its spring meetings this week.  The institute has singled out the US for praise in enacting extraordinary stimulus amid the coronavirus crisis to fast-track a global economic recovery, while also warning about the potential for these measures to cause longer-term structural damage to worldwide economies.  “There’s no question that stimulus in the United States presents a very favorable backdrop to the growth projections that we have made,” Geoffrey Okamoto, first deputy managing director of the IMF, said.  “I wouldn’t characterize it as a crutch. This is a tailwind, right, that countries should be able to use or capitalize on to try and ride through the remaining amount of time until they can get all of their citizens jabbed and their economies reopen,” he added.  The IMF said in its World Economic Outlook that the global economy was on track to expand 6% this year, upgrading its forecast for the 2nd time in 3 months.  It comes after an estimated 3.3% contraction in 2020 & the worst global recession since World War II.  IMF managing director Kristalina Georgieva said the brighter outlook was underpinned by the rollout of coronavirus vaccines & economic stimulus measures, “especially in the United States.”

Debt overhang and financial vulnerabilities endanger recovery, IMF warns

Not much happening in the stock market.  Investors are assessing another spending package while the economy is expected to be fairly strong this year. 

Dow Jones Industrials

 






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