Equities are reacting positively to the better than anticipated second revision of Gross Domestic Product which dropped from 2.40% to 1.60%, however the expectation was that the drop would be more pronounced to 1.40%.
However, the last 4 readings of GDP show a growing concern that the trend clearly indicates that, as government intervention stops, so does economic growth. The question is whether a combination of monetary policy (via the Fed), an eventual improvement in the unemployment rate (which would help consumption) and changes in China's currency manipulation would be enough to create a healthy and sustainable economic recovery.
Source: Bloomberg L.P. Chart by the Fixed Income Strategies Group RBC WMIn terms of Initial Jobless Claims, the Department of Labor released its weekly initial jobless claims report on Thursday which showed that first time claims dropped by 31,000 to 473,000 compared to last week’s revision of 504,000. Analysts were expecting a reading of 490,000. Additionally, continuing claims were also lower than the forecast by 39,000 at 4.456 million versus the expected 4.495 million. However, last week’s number was upwardly revised from 4.478 million to 4.518 million.
However, the less volatile 4-week average number of initial claims was 486,750, an increase of 3,250 compared to the previous report. Although the better than expected Jobless Claims may temporarily calm investors’ worries, next week’s unemployment report will be crucial in giving a clearer picture of the state of the labor market for the month of August.
No comments:
Post a Comment