US Initial Jobless Claims Hit Three-Year Low

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Transcript

00:00Right now we are getting initial jobless claims, which is the key data that we get

00:04after what we got with Challenger. And they actually come in less than expected. They were

00:09expected to come in at 220,000. They came in at 191,000. It is down from what we saw last week,

00:16which was 216,000. Now for continuing claims, you also see a slight decline. So the people who

00:23actually were receiving unemployment benefits ticks lower to 1.939 million from 1.96 million.

00:31I know it's like parsing hairs at the same time in the right direction. This would indicate that

00:36the economy is not necessarily falling off the cliff. Bloomberg's Enda Curran joins us with more.

00:41Enda, what do we see here? Well, it was a holiday shortened week,

00:45least worth bearing in mind. But I think it's interesting to your point that the continuing

00:49claims also dipped a little bit. I mean, you can have the volatility in the headline number,

00:53but a lot of people have been arguing that the ongoing increase in the continuing claims

00:57suggests a weakening labour market. Nonetheless, the headline figures taken with the Challenger

01:02data earlier on this morning, suggesting that layoffs, the pace of layoffs has maybe slowed,

01:07perhaps suggests maybe the jobs market isn't as bad as thought or perhaps is even stabilising.

01:12But really, Lisa, the bigger picture, though, we have to remember here, even without the official

01:16data, of course, is that we've had the ADP. We've had those warnings from the Beige Book.

01:20And of course, we have rolling headlines from companies that at the very least,

01:23the labour market is softening. The question now is just how weak it is. And of course,

01:27until we get a good run of official data, it's very hard to make that judgment.

01:31When you look at markets and how they're responding to this, it's kind of, as you would expect,

01:35a mixed picture. On one hand, it does seem like the Fed can cut rates come next week. At the same time,

01:41the degree to which they are able to cut rates going forward in question. You can see this.

01:46S&P futures now almost flat. NASDAQ futures down now a tenth of a percent. Russell 2000 down three

01:51tenths of a percent. The Y is in the bond space. Twos, tens and thirties. Yields higher. Price down

01:57across the board, up three basis points at the front end. 3.51 percent. Ten-year yields, similar type

02:04of move. It does seem like when you bleed this through the currency space, this is actually going to

02:09be a stronger dollar, at least for the moment, pausing some of the weakness that we have been

02:13seeing. And it does seem like this does put the Fed in a position maybe to cut next week. But after

02:19that, a lot of questions of how far they can go. Well, that is a big question, Lisa, as you say.

02:25The markets have clearly decided the Fed will cut next week. We had some strong dovish signals

02:29towards the start of the blackout period, in particular, the head of New York Fed, John Williams,

02:34of course, suggesting that perhaps there is enough there to get the Fed over the line for a rate cut.

02:38We don't know that. We know it's going to be somewhat of a close call. But to your point,

02:42whatever comes out of that decision next week, and especially if they do cut, clearly the indications

02:47will be that it's going to be a complicated story heading into next year. We know that inflation

02:50remains well above the target. We get PCE tomorrow. That will give us some indications to where PCE is

02:56headed. But when you consider the backdrop of a weakening labour market, but we don't know by how much

03:01it's weakening. Inflation is still above target, but we don't quite yet know what direction it is headed.

03:06It's going to take a few more months to get a final handle on the tariff story. There's a lot up in the air

03:09right now. So even if the Fed do cut next week, early next year already looks quite complicated.

03:14So even if the Fed do cut next week, the Fed's fall is yours. It's good. But at least the F