The Labor Department reported that initial jobless claims fell more than expected last week and the prior week’s number of claims was revised lower. The very low number of claims matches the lowest reading ever, except for one month in 1968. This week’s data is considered more reliable than reports over the last two years as it returns to the seasonal adjustment process that was used prior to COVID. Claims in regular state programs decreased 5,000 to 166,000 for the week ending April 2nd, after reporting a downwardly revised 171,000 initial claims the prior week. The four-week moving average fell to 170,000 from 178,000 the prior week. The total number of people continuing to receive regular ongoing state benefits, a report which is lagged one week, increased 17,000 to 1.523 million for the week ending March 26th.
The Commerce Department reported that factory orders decreased 0.5% in February after increasing 1.5% in January. Factory orders ex transportation increased 0.4% after gaining 1.2% in January. The closely followed forward looking demand from businesses for nondefense capital goods, excluding aircraft declined 0.2% in February after gaining 1.2% in January.
The Commerce Department reported the trade deficit edged lower in February from lofty levels in January with both imports and exports climbing. The deficit decreased just slightly to a negative $89.18b billion in February from a negative $89.23 reading in January. Exports rose 1.8% to $228.6 billion and imports climbed 1.3% to $268.6 billion.
The Institute for Supply Management reported its Services index, which covers services and construction, shows growth in services accelerated in March. The gain in services growth indicates the economy is still strong, even as rising inflation, supply-chain challenges and geopolitical uncertainty hurt consumer confidence. This gauge of service providers accounts for 90% of the economy. The services index improved to 58.3 in March from a 56.5 reading in February. A reading more than 50 indicates expansion in the services sector.
The FOMC Minutes for the March 15-16th meeting confirmed Fed Governor Lael Brainard’s warnings about a rapid balance sheet reduction and expectation that the FOMC will raise the Federal Funds rate by 50 basis points in May. The release of the minutes caused a rapid increase in yields across the yield curve. The minutes confirm the Fed is finally taking inflation pressures seriously and will quickly reduce its accommodative policy.
The Federal Reserve reported consumer credit surged by the most on record in February. Consumers borrowed heavily with credit card purchases as well as loans for autos and student loans. Consumer credit increased $41.8 billion after gaining an upwardly revised $8.9 billion in January. Credit card debt jumped 18.0 billion to $1.063 trillion with auto and student loan debt increasing by $23.8 billion to $3.420 trillion.
The Commerce Department reported wholesale inventories rose 2.5% in February after gaining 1.2% in January. Year-on-year wholesale inventories have gained 19.9%. Wholesale sales increased 1.7% in February after gaining 5.0% in January, with year-on-year sales up 25.5%.
The Mortgage Bankers Association reported the MBA index of mortgage applications decreased 6.3% for the week ending April 1st after declining 6.8% the previous week. Refinancing applications decreased 9.9% to 1,166 from 1,295 the prior week. Home purchase mortgage applications decreased 3.4% to 258.1. The average contract rate on a 30-year fixed-rate mortgage increased to 4.90% from 4.80% the prior week for a 30-year fixed rate loan.
Mr. Clark has been in investment banking since 1983. He is a Chartered Financial Analyst. He has been a fixed income strategist at Stephens Inc. since 1996, developing investment strategies, policies and procedures for institutions consistent with overall asset/liability management.Read full bio