After reading today’s weekly update on jobless claims the Fed’s comment yesterday that “economic activity has been expanding at a solid pace” carries more weight. Indeed, new filings for unemployment benefits dropped by a staggering 43,000 last week to a seasonally adjusted 265,000—the lowest in nearly 15 years. The shortened business week due to the Martin Luther King holiday no doubt played a role, but for the moment it’s hard to spin today’s numbers into anything other than a positive sign for the economy.
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The Federal Reserve continues to signal that it will start raising interest rates later this year, according to yesterday’s FOMC statement. But the Treasury market begs to differ. The benchmark 10-year yield fell to 1.73% yesterday, the lowest since last May. Notably, the 2-year yield, considered to be the most sensitive to rate expectations, is also trending lower again, slipping to 0.50% yesterday.
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● Fed upbeat on U.S. economy, cites strong job gains | Reuters
● German Unemployment Drops as Growth Strengthens | Bloomberg
● Eurozone M3 Growth Accelerates; Loan To Private Sector Falls | RTT
● Japan Dec Retail Sales Up for 6th Month To Highest Since Mar | MNI
● 401(k) balances rise, but lag market gains | MarketWatch