Weekly jobless claims comes in lower than expected

Key Concepts:

• Initial Jobless Claims: A measure of the number of people filing for unemployment benefits for the first time.
• Continuing Claims: A measure of the number of people receiving unemployment benefits who have already filed an initial claim and are continuing to receive benefits.
• Treasury Yields: The return an investor receives from holding a U.S. Treasury bond.
• Bond Auction: A process where the U.S. Treasury Department sells new bonds to investors.

Jobless Claims Data Release

• Anticipation: The report focuses on the imminent release of jobless claims data and its potential impact on the market.
• Market Overview: Before the data release, the S&P 500 is down 3 points, the Dow is off by 48 points, and the Nasdaq is up by 2 points. The 10-year Treasury yield is largely unchanged at 4.34%, while the 2-year yield is down to 3.858%.
• Psychological Threshold: Rick Santelli highlights that 250,000 is a psychologically important level for initial claims. The U.S. hasn't been above it since October of last year. Continuing claims remain over 1.9 million.
• Data Release: Initial jobless claims for the week of July 5th come in at 227,000, lower than expected. The previous week's number is revised to 232,000, resulting in a decrease of 5,000.
• Historical Context: The 227,000 figure is the smallest number since mid-May, when it was 226,000.
• Continuing Claims Analysis: Continuing claims are at 1,965,000, remaining above 1.9 million for another month. These numbers are the highest since 2021.
• Auction Impact: The report mentions an upcoming auction of $22 billion in 30-year bonds at 1:00 PM Eastern.

Treasury Auctions and Market Behavior

• Recent Auctions: The 10-year Treasury auction the previous day was "very solid," and the 3-year auction was "slightly above average."
• Supply and Demand: The report suggests that supply is not currently an issue in the market.
• Yield Range: The market has been mostly sideways, remaining close to the upper end of the range, around 4.40% to 4.5%. The yield briefly hit under 4.20% intraday the previous week.

Conclusion

The jobless claims data came in lower than expected, indicating a potentially strong labor market. While continuing claims remain elevated, initial claims are behaving well historically. Recent Treasury auctions have been solid, suggesting healthy demand. The market has been trading sideways, with yields remaining within a defined range.