It’s only one datapoint, though this afternoon’s US jobless claims figures appear to have steadied some market nerves, with claims rising by just 233k in the week to 3rd August, considerably below both the consensus expectation, and prior print.
Stocks have popped in reaction, as dip buyers emerge for a third straight day, though the rapid nature by which gains fizzled out yesterday may be some cause for concern, particularly with the S&P remaining below its 100-day moving average.
Nevertheless, the rather sizeable equity, and Treasury, reaction to what is usually a glossed-over data release speaks to how the market continues to hang on the ‘growth scare’ narrative, with next week’s retail sales print the next jigsaw piece in further allaying concerns over an imminent US economic slowdown, which were sparked by last week’s poorer-than-expected labour market report.
Over the medium-term, the path of least resistance should still lead to the upside for stocks, with earnings and economic growth both resilient, and with the Fed set to begin policy normalisation from September onwards, albeit likely not to the extent of the 100bp of cuts markets price by year-end.
