US initial jobless claims 243K vs 230K estimate. Highest level since August of last year.

• Prior week 222k revised to 223K.
• Initial jobless claims 243K vs. 230K estimate. Highest since August of last year.
• 4-week moving average of initial jobless claims 234.75K vs 233.75K last week
• prior week continuing claims 1.852M revised to 1.847M.
• Continuing claims 1.867M vs 1.855M estimate. This is the 6th week above 1.800M. Highest since November 2021.
• 4-week moving average of continuing claims 1.851M vs 1.839M last week.

This week is the survey week for the BLS employment report to be released at the start of the next month.

The data this week should be less influenced by faulty seasonals as a result of the July 4 holiday. As a result, it should be more reflective of the trends in the employment (all things being equal). THe move to the upside in both the initial and continuing claims is suggestive of a weaker employment picture.

US yields are trading near the lows but still higher on the day:

• 2-year yield 4.435%, +0.7 basis points
• 10 year yield 4.167%, +2.1 basis points

Looking at the US stocks:

• Dow industrial average, -71 points
• S&P index, +13.48 points
• NASDAQ index, +120 points

Former vice chairman of the Federal Reserve Roger Ferguson on CNBC now expects a September cut. He has previously been more hawkish.

Fed officials have indicated of late that “it’s not just about inflation”. Fed Powell on Monday reiterated previous comments on the inflation/employment balance by saying:

• “Now that inflation is coming down, will look at both mandates”

Other Fed officials have also picked up on the dual mandate risk and the fear that employment will start to show some additional weakness. This may keep the end of July meeting in play (July 30).

With the next meeting not until mid-September, can the Fed afford waiting too long to start the easing cycle?

This article was written by Greg Michalowski at www.forexlive.com.