Little Let-Up in Jobless Claims

A larger-than-expected rise of 2.98M in the number of Initial Jobless Claims along with negative follow-through from yesterday’s remarks by Jerome Powell have worked to push bond prices higher and equity prices lower this morning. For the week ending May 9th, only 2.5M new filers were expected after the previous week’s increase of about 3.2M.

In his remarks yesterday to the Peterson Institute of International Economics, Powell didn’t really say anything he hadn’t said before, but his recognition of downside risks and perception of the need for more fiscal economic support seemed to surprise equity investors who might have been expecting a bit more cheerleading. They also might have been expecting a move to a negative policy rate but Mr. Powell decisively eliminated that possibility during the Q&A.

Also out this morning was a report from the Bureau of Labor Statistics showing that Import Prices fell by a less-than-expected 2.6% in April while Export Prices dipped by a larger-than-expected 3.3%. For a year-over-year comparison, Import Prices have fallen 6.8% while Export Prices have slid by 7%. The disinflationary and deflationary impact of the economic shutdown continues to intensify as we have already seen in this week’s CPI and PPI reports.

As a result, the Ten-Year has rallied by about 3/8 point and that has pushed its yield down to around 61 basis points with the DJIA looking to open deep in the red. WTI is up a little bit to around $25.75/barrel with gold up slightly to $1,720.