Jobless Claims Are Low, But Filings Rise In Annual Terms

New filings for unemployment benefits in the US increased 13,000 last week to a seasonally adjusted 277,000, the Labor Dept. reports. That’s still a low number in historical terms and taken at face value the latest report implies that the labor market will continue to expand. But today’s release reveals a worrisome return of year-over-year gains in the data—for both seasonally adjusted and unadjusted figures. It could be noise, but the pattern of late is hinting at the possibility that the tide may be turning for this leading indicator.
Continue reading →

The 10-Year Yield Ticks Lower As Fed Delays Rate Hike

The benchmark 10-year Treasury yield eased yesterday (June 15) to 1.60%–the lowest since late 2012, based on daily data via Treasury.gov. The downtick follows yesterday’s decision by the Federal Reserve to delay another rate hike. Why? The economy’s too weak to sustain another round of policy tightening, at least for the moment. As a result, the benchmark Treasury yield is closing in on its all-time low in July 2012 of just above 1.40%. Will we see a new record low at some point in the near future? No one knows, of course, but it’s premature to discount the possibility. In other words, the multi-decade bull market for bonds isn’t quite dead after all.
Continue reading →

US Industrial Output Tumbles In May

US industrial activity slumped 0.4% in May, well below expectations. The monthly decline reverses April’s bounce and throws cold water on the notion that output was heading toward a summer revival. The manufacturing component fell, too, posting a 0.4% drop that pushed this slice of output into the red in year-over-year terms for the first time this year, according to this morning’s update from the Federal Reserve.
Continue reading →

No Sign Of A Rate Hike Today Via The 10-Year Treasury Yield

The benchmark 10-year Treasury yield yesterday remained at its lowest level since late-2012, according to daily data published by Treasury.gov through June 14. For the second consecutive day, this widely followed rate held at 1.62%–more than 60 basis points below the level at the start of the year. The implication: the bond market is expecting that the Federal Reserve will leave interest rates unchanged in today’s FOMC meeting—and perhaps for months to come.
Continue reading →

US Retail Sales Up A Solid 0.5% In May

Retail spending in the US rose 0.5% in May, the Census Bureau reports–a bit better than economists expected. The gain marks a sharp downshift from April’s 1.3% bounce. But April’s unusually strong advance isn’t sustainable and so it’s no great tragedy that today’s report is weaker by comparison. Overall, looking at the last two monthly increases suggests that there’s still a healthy glow for retail sales. A less-encouraging profile emerges, however, when we focus on the year-over-year trend, which is probably more reliable for analyzing the appetite for spending.
Continue reading →

Considering Annual Changes For Projecting GDP

No one would characterize GDP forecasting as easy. Some might call it worthless. But to the extent that we crunch these numbers, it’s useful to note that there are many ways to slice and dice. Not surprisingly, results vary–sometimes by a lot. Among the various knives in this drawer is one with the potential to minimize the noise via modeling GDP changes on a year-over-year basis. It’s flawed, of course, like every other effort at divining the future. But the underlying methodology has a certain appeal, as I’ll discuss. And maybe, just maybe, its flaws are less egregious vs. the usual suspects that attract so much attention in the GDP prediction game.
Continue reading →