Coming Up Late-Summer Roses: Fed Rates, Jobless Claims and More

Thursday, September 19th, 2024

Pre-market futures are feeling themselves this morning. We’d just passed the crucible of the “higher for longer” term of interest rates from the Fed — a series of sometimes significant rate hikes from March 2022 through July 2023, with more than a year in a holding pattern at 5.25-5.50% — but yesterday signaled a new era of bringing down these rates in the continued effort to bring a “soft landing” to the economy. 

Market participants have plenty to cheer this morning, as the Fed appears to have engineered what many experts had figured was impossible: getting through the tightening cycle without “breaking” something and sending us into recession. Of course, with the labor market looking shakier in recent months, we’re not completely out of the woods, but let’s not spoil the party just yet.

The Dow is up +463 points at this hour, +1.1% — and it’s the weakest of the major indexes this morning. The S&P 500 is up +87 points, +1.55%, and the Nasdaq is currently +414 points, +2.14%. The small-cap Russell 2000 right now has gained +52 points, +2.39%.
 

Jobless Claims Come Down: 219K on Initial, 1.829M Continuing

The labor market outlier of late has been the Weekly Jobless Claims reports, which have remained well-behaved through much of what we’ve seen eroding from other employment numbers. Part of this may have to do with the high number of Baby Boomers — and now Gen-X — employees who, instead of filing for unemployment upon being laid off from their job, instead simply call it a career.

This morning’s Initial Jobless Claims are even better than normal: 219K is the lowest weekly total we’ve seen since mid-May, and 10K below consensus expectations. This follows a slightly upwardly revised 231K the previous week, and even that was considered “safe” territory.

Continuing Claims reached 1.829 million for the week prior to last (Continuing Claims are always a week in arrears from new claims), which is the slimmest figure since mid-June. It follows a downwardly revised 1.843 million — still above 1.8 million, where we’ve been for weeks, but still sub-1.9 million.
 

Philly Fed Manufacturing Surprises to Upside

Even today’s Philly Fed manufacturing survey for September brought somewhat good news: at a headline +1.7, it swings to a positive from the estimated -1.1 and the unrevised -7.0 reported a month ago. This makes seven months out of nine in 2024 where Philly Fed manufacturing has registered a positive number. 
 

What to Expect Today: Existing Home Sales, Economic Indicators

After today’s open, Existing Home Sales for August are expected to trim down a notch sequentially, to 3.9 million seasonally adjusted, annualized units from 3.95 million reported last month. Over time, with the Fed easing cycle now underway — and with it lower mortgage rates — we expect both new and existing home sales figures to improve from here.

Also Leading Economic Indicators (LEI) for August will hit the tape a little later this morning. Here we expect a negative -0.3%, but this is still an improvement from the -0.6% reported a month ago.

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