Jobless Claims Swing Higher
Economic data, including jobless claims, came in weaker than expected this morning,. For seasonally adjusted initial claims, there was a jump to 242K in the first week of June, the highest reading since last August.
Before seasonal adjustment, claims totaled 234.7K. As shown in the first chart below, that is still lower than the comparable week of last year and is also within the range of readings of other recent years save for the much more elevated levels observed in 2020 and 2021. For this point of the year, claims face seasonal headwinds. Historically, the current week of the year has seen claims rise close to three-quarters of the time with a median increase of 37K. That was right in line with the 38.5K uptick that was observed.
As we will detail further in tonight’s Closer, given the NSA number rose by as much as could be expected, it is peculiar that the seasonally adjusted number rose as significantly as it did.
Finally, we would note that continuing claims have also pressed higher, reaching 1.82 million. As shown below, that is the first reading above 1.8 million since the final week of March and the most elevated reading of any week since January 20th.
Bespoke’s Morning Lineup – 6/13/24 – More Weaker Than Expected Inflation Data
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“You have the right to remain silent. Anything you say can, and will, be used against you in a court of law.” – Every Episode of every Law & Order series
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Whether through firsthand knowledge or watching any TV show or movie involving an arrest, every American is familiar with Miranda rights. While it seems like a basic principle of US law enforcement, it wasn’t until this day in 1966 that the Supreme Court ruled that every person arrested in the United States must be informed of their basic right to remain silent and have an attorney before any police interrogation can take place. Now if only a lot of other people would exercise their right to remain silent.
Futures aren’t silent this morning, and they just got a pop higher as both jobless claims and PPI came in weaker than expected. Initial jobless claims surged to the highest level since last August. PPI came in weaker than expected at both the headline and core levels. On a y/y basis, they are up 2.2% and 2.3% respectively relative to expectations for a level of 2.5%. Based on this morning’s PPI and yesterday’s CPI, the Fed’s statement is less than 24 hours old, but it’s turning stale quickly.
With Apple’s (AAPL) move back near the top of the market cap leaderboard, we wanted to highlight the continued divide between the top three stocks in the S&P 500 and the rest. The snapshot below of our Trend Analyzer shows where each of the top three stocks in the S&P 500 – Apple (AAPL), Microsoft (MSFT), and Nvidia (NVDA) – as well as the S&P 500 Equalweight ETF (RSP) closed yesterday relative to their short-term trading ranges. While all three of the top three closed at ‘extreme’ overbought levels (2+ standard deviations above their 50-DMAs), RSP remains in neutral territory and is down slightly over the last five trading days. Besides that disparity, the YTD performance and 50-day moving average spreads of the top three stocks look nothing like the YTD performance and 50-DMA spread for RSP.
The charts of the top three also look much different than RSP (and it’s not just because we shaded RSP in gray). As shown below, all three of the largest stocks hit all-time highs yesterday while RSP has been stuck in a range since the peak in March.
To continue reading the rest of today’s morning note, where you’ll find much more analysis of global equities and economic readings released this morning, read today’s full Morning Lineup with a two-week Bespoke Premium trial.
The Closer – CPI, FOMC, EIA – 6/12/24
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we begin with a dive into the latest CPI data (page 1) followed by a recap of the FOMC decision (page 2) as well as the market’s response to the decision (page 3). We then finish with a review of the historic trade numbers in the latest EIA data (page 4).
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Daily Sector Snapshot — 6/12/24
Chart of the Day: CPI Causes Cut Optimism
Fixed Income Weekly — 6/12/24
Searching for ways to better understand the fixed income space or looking for actionable ideas in this asset class? Bespoke’s Fixed Income Weekly provides an update on rates and credit each week. We start off with a fresh piece of analysis driven by what’s in the headlines or driving the market in a given week. We then provide charts of how US Treasury futures and rates are trading, before moving on to a summary of recent fixed-income ETF performance, short-term interest rates including money market funds, and a trade idea. We summarize changes and recent developments for a variety of yield curves (UST, bund, Eurodollar, US breakeven inflation, and Bespoke’s Global Yield Curve) before finishing with a review of recent UST yield curve changes, spread changes for major credit products and international bonds, and 1-year return profiles for a cross-section of the fixed income world.
Our Fixed Income Weekly helps investors stay on top of fixed-income markets and gain new perspectives on the developments in interest rates. You can sign up for a Bespoke research trial below to see this week’s report and everything else Bespoke publishes for the next two weeks!
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Bespoke’s Morning Lineup – 6/12/24 – “Make Room For Me”
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“Mr. Gorbachev, open this gate. Mr. Gorbachev, tear down this wall.” – Ronald Reagan, 6/12/1987
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Today is the biggest day of the week for data, and the “first act” just hit the stage as CPI came in weaker than expected. At the headline level, CPI was unchanged while Core CPI increased 0.2% versus forecasts for a gain of 0.3%. Year/year Core CPI came in at 3.4%, the lowest level since April 2021. Futures have surged in reaction. It’s hard to believe that a week ago this morning, the market was all worried about stagflation with weaker economic data (Chicago PMI and ISM Manufacturing) and stubborn inflation. After last Wednesday’s ISM Services report, a strong headline employment report, and today’s CPI report, stagflation has been pushed off the stage as Goldilocks cries, “Make room for me!”
It’s not a Presidential election, but for the first time in four years, the Federal Reserve will announce an interest rate decision on the same day as a monthly CPI report. Since 1998, there have only been 17 other days where both events happened on the same day, and in the chart below, we show the S&P 500’s performance each time. Overall, returns have been positive with a median gain of 0.56% and gains just over three-quarters of the time. The best day for the S&P 500 on these days was in December 2008 when the S&P 500 rallied 5.14% while the worst performance was the most recent occurrence on 6/10/20 when the S&P 500 declined 0.53%. Ironically, the best day came in the middle of one of the deepest bear markets in a generation while the worst day was in the early stages of the post-Covid surge.
The table below shows the performance of the S&P 500 and all eleven sectors on each of the 17 prior days. We also show the Fed’s interest rate decision for each meeting. Of the 17 occurrences shown, the Fed cut rates twice, raised rates four times, and kept rates on hold eleven times. On the eleven days when the Fed left rates on hold, the S&P 500’s median gain was also 0.56% with gains just over 80% of the time. The two best-performing sectors on these days were Technology (1.10%) and Materials (1.01%) with gains of 91% and 82% of the time, respectively.
To continue reading the rest of today’s morning note, where you’ll find much more analysis of global equities and economic readings released this morning, read today’s full Morning Lineup with a two-week Bespoke Premium trial.
The Closer – Birth Rate Counterfactuals, Pre-Fed Setup, Stellar 10s – 6/11/24
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we start out tonight with a look into US birth rates (pages 1 and 2) followed by a quick technical update of yields, WTI, gold, and the dollar ahead of the FOMC decision tomorrow (page 3). We finish with a recap of the standout results of today’s 10 year note reopening (page 4).
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