The economic data released this morning have a dovish tint about them.The initial jobless claims report showed a big jump in first time filers and in continuing claims. The 4 week moving average at 393K is approaching the Maginot line of 400k.
Some are trying to explain away some of the softness in this number as relating to claimants filing for extended benefits. That may be the case but the I do not see how one can explain away all of the increase and the trend of the last three weeks is troublesome.
The claims data has always been my favorite piece of data because it is real time and contemporaneous. So the glide in the 4 week moving average towards 400K speaks volumes and says that there is another leg down brewing.
The ECI data were quite benign and I won’t belabor it except to say that there is no indication in that report of a nascent wage price spiral.
Regarding the GDP report, it is troubling that exports added 2.4 percent to the total. It is troubling because it appears that foreign economies are rolling over and with that demand for exports should fade.
The Chicago Purchasing manager survey breached the 50 level. It is one survey of one region of the country so I will withhold judgment. Since I have my bear hat on I will note that the employment component dipped and in concert with the rise and claims and the job section of the sentiment surveys it points to a weaker number tomorrow than many are anticipating.
In early treasury trading there has been central bank selling of the belly of the curve and an eclectic group selling the 2 year note. The 2 year note is trading very close to 2.50 percent which is the 200 day moving average for that issue. So, many in the chart carrying crowd will blindly sell in front of that chart point.
Today is the last day of the month. The month end extension is minimal in the US but is substantial in Europe. However, Europe has significantly outperformed the US the last several days and there has been some profit taking on that trade this morning.