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Important releases hone in on rates and consumer spending

Part 9
Important releases hone in on rates and consumer spending (Part 9 of 10)

Will the job recovery affect jobless claims and popular ETFs?

Initial jobless claims for the week ended July 5, 2014

The U.S. Department of Labor will release the initial jobless claims numbers for the week of July 5 on Thursday, July 10. Unlike the non-farm payrolls and the JOLTS reports, this is a weekly release. The headline number gives you an estimate of the people filing for first-time unemployment insurance. An increase in initial claims usually implies a slowdown in the jobs market, and vice versa.

Part 9Enlarge Graph

Key takeaways from last week’s release

  • Initial jobless claims increased marginally week-over-week. They rose by 2,000 to 315,000 for the week ended June 28.
  • The four-week moving average also edged up slightly. It rose by 500 to 315,000 for the week ended June 28. June has seen this figure increase in three out of four weeks. The four-week moving average stood at 310,500 at the end of May. This had increased to 315,000 at the end of June.

An increase in claims—and, more importantly, the four-week moving average—is a negative for the labor market. However, this is a weekly release. So it’s prone to volatility and affected by unique weekly events. This means it has less of an impact on stock (IVV) and bond (BND) markets. The four-week average smooths out week-to-week volatility. It’s basically the preferred yardstick for economists and analysts in determining labor market trends.

The non-farm payrolls report came out on Thursday, July 3. It has more of an impact on stock (SPY) and bond (AGG) markets. The better-than-expected figures for June propelled the S&P 500 Index (VOO) to a new record high of 1,985.44 on Thursday. Intermediate-term Treasuries, between two and seven years, increased by 3 basis points on July 3 on the upbeat economic outlook.

Wholesale trade

In the next part of this series, we’ll analyze the outlook for wholesale trade releases for June. These will also come out on Thursday, July 10.

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