Correction: An earlier version of this post noted that claims fell to an 8-year low, which is true only in terms of average monthly data–a detail that was left out previously. On a weekly basis, today’s claims total is the lowest since the week through July 19, 2014, which is the current 14-year low. Sorry for the confusion.

Earlier this week I wondered if the deteriorating state of macro in the Eurozone would eventually pinch the US economy. Some degree of blowback is likely, although for the moment there’s no sign of turbulence, according to this morning’s weekly update on initial jobless claims. It’s still early in the game for detecting signs of imported trouble from Europe. But it’s certainly encouraging to see that the US trend by way of claims looks robust as we head into a period that may be challenged with a nasty storm from abroad. Indeed, today’s numbers on new filings for unemployment benefits clearly show that positive momentum in the US labor market remains intact.
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The Federal Reserve recently introduced a new monthly measure of the US labor market—the Labor Market Conditions Index (LMCI)—and starting this week the series is available on the St. Louis Fed’s FRED database, an addition that makes it easy to download, analyze and monitor the data. Does LMCI offer deeper insight beyond what’s already available in the usual suspects, such as nonfarm payrolls and initial jobless claims? In particular, will LMCI dispense a superior set of timely and reliable signals for tracking critical changes in the US business cycle? Some analysts are skeptical—economist Tim Duy, for instance, isn’t impressed with LMCI’s debut. The acid test, of course, is evaluating the index on a real-time basis going forward. That’s going to take time. Meanwhile, let’s take a closer look at this newly minted series for some perspective.
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● German exports fall 5.8%, deepest since Jan. 2009 | MarketWatch
German exports in August suffered their biggest monthly fall since January 2009, adding to a recent spate of dismal economic indicators from Europe’s largest economy, data from the country’s Federal Statistics Office showed.
● Dollar hits fresh 2-week low in wake of dovish Fed minutes | Reuters
The dollar hit a two-week low versus a basket of currencies on Thursday, after minutes from the U.S. Federal Reserve’s last meeting prompted markets to push out expectations for the likely timing of an interest rate rise.
● Stagnation for 5 years is likely for eurozone, says Nobel laureate | Telegraph
Michael Spence says bold decisions are needed to lift the 18-nation bloc out of its moribund state
● Leading indicators: weakening Eurozone growth; stability elsewhere | OECD
Composite leading indicators, designed to anticipate turning points in economic activity relative to trend, point to a mixed outlook across major economies, characterised by weakening growth in the Euro area and stable growth in most other major economies.
● Time to Look at High Yield Again | Pimco
Given PIMCO’s view for a lower-growth global economy and subdued interest rates over the foreseeable future – an outlook we call The New Neutral – the case for high yield bonds is a compelling one, both as a tactical and strategic allocation.