- Traders are eyeing up US non-farm payroll numbers later
- Further indicators of stagflation from China, US
- Energy prices soar in Europe
A decline in US weekly jobless claims to their lowest level since the pandemic began was greeted by new record highs on Wall Street. To be fair, just about anything is greeted by a new all–time high. Initial claims came in at 340k for the week ended August 28th, versus expectations of 345k, and the lowest since March 2020. But it wasn’t all good news. The total number of continuing claims in the week ending 14 August was 12,186,158, an increase of 178,526 from the previous week. Meanwhile, while that ADP number on Wednesday was a big miss, and as noted here before, the report is not a great predictor for the nonfarms. Indeed, lately it’s been spectacularly inaccurate. Elsewhere, US durables orders ex-defence were –1.1 per cent month-on-month, while factory orders ex-transport +0.8 per cent vs +1.4 per cent in the prior month.
Today’s nonfarm payrolls are the main event. The Federal Reserve has tied monetary policy tightly to the labour market and is yet to see the ‘substantial further progress’ it requires to start tapering bond purchases, let alone raise rates. Therefore, the pace of job creation will give markets a signal as to the pace and timing of the Fed’s long-expected taper. Expectations are running around 720k for today’s print.