US DATA: Upward Trend In Jobless Claims Confirmed
Jun-18 12:52
The weekly jobless claims data confirmed recent deterioration in the labor market. There was a sizeable step higher in initial claims compared to recent payrolls reference periods along with the highest four-week moving average since Aug 2023, whilst continuing claims hovered close to the previous week's fresh high since late 2021.
- Initial jobless claims were as expected at 245k (sa, cons 245k) in the week to Jun 14 – a payrolls reference period – after a slightly upward revised 250k (initial 248k).
- This can still be revised next week but for now it points to a clear step higher from reference payroll periods (226k for May, 216k for Apr, 225k for Mar and 224k for Feb).
- The four-week moving average increased to 246k from a marginally upward revised 241k (initial 240k) for its highest since Aug 2023.
- Continuing claims were a touch higher than expected at 1945k (sa, cons 1941k) in the week to Jun 7 after a slightly downward revised 1951k (initial 1956k).
- It rules out a larger downward revision from what had been a firm uptick in continuing claims in the prior week for a fresh high since late 2021, with only a marginal improvement seen in latest data.
- The claims rate saw a second week at 1.28% after two weeks at 1.25%. Increases from what had been sustained 1.2% readings has drawn some attention in recent weeks.
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US TSY FUTURES: TU/UXY Steepener blocked
May-19 12:51
Latest block trades lodged at 08:32:39 NY/13:32:39 London:
- TUM5 15.5K lots blocked at 103-08.25, looks like a buyer.
- UXYM5 6.7K lots blocked at 111-12+, looks like a seller.
- Would suggest a ~$570K Dv01 steepener, with subsequent price action on the 2s10as cash curve adding weight to that idea.
US TSYS: Goldman Marked End Of Year Yield Forecasts Higher Before Moody’s Action
May-19 12:38
Just ahead of Moody’s downgrade of the U.S. sovereign credit rating late on Friday Goldman Sachs revised their year-end 2-Year & 10-Year Tsy yield forecasts to 3.90% and 4.50%, respectively (from 3.30% and 4.00% previously).
- They reasoned that “the combination of a smaller mechanical tariff headwind and a meaningful reversal in financial conditions from the early-April peak has trimmed the downside risk around growth. With inflation still likely to reaccelerate meaningfully - albeit to a slightly lower peak than before - the baseline for further Fed cuts has shifted later and slower, with a quarterly cadence of cuts beginning in December reaching an unchanged terminal rate projection of 3.50-3.75% in June 2026”.
- For shorter maturity rates, Goldman think that “the absence of a clear growth catalyst may keep yields trade somewhat range-bound from here, but the vulnerability for now is closer to a carry drag than a clear case for substantial cheapening. The asymmetry is still to a sharp rally on bad news, with the market-implied probability of recession-type cuts having retreated significantly since the end of April”.
US: MNI POLITICAL RISK - Big Beautiful Bill Clears Another Hurdle
May-19 12:29
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- President Donald Trump has three engagements schedul for his first full day back in Washington. Press Secretary Karoline Leavitt will deliver her first White House presser since May 9.
- The “sell America” trade is back after Moody’s downgraded the US' credit rating, citing concerns over the Republican fiscal package. Treasury Secretary Scott Bessent downplayed the rating change, saying it is a “lagging indicator”.
- Bessent conceded that consumers are likely to pay some of the cost of tariffs after speaking with the Walmart CEO.
- Trump renewed his attack on Fed Chair Jerome Powell, while Bessent indicated the Fed’s position on rates isn’t a determination that tariffs will cause inflation.
- The House Budget Committee advanced the Republican reconciliation bill after four Republican hardliners changed their votes to 'present', signalling they expect alterations to the package in the Rules Committee this week.
- Senate Majority Leader John Thune (R-SD) is slated to hold a procedural vote on a landmark crypto bill today.
- A call between Trump and Russian President Vladimir Putin today could determine if the US joins the EU in punitive new sanctions on Russia.
- President Trump’s chief negotiator said Iran must cease all enrichment in a new nuclear accord.
- Vice President JD Vance nixed a plan to travel to Israel due to concerns over Israel's military operation in Gaza.
- Poll of the Day: Trump's strategy of 'flooding the zone' may be working.
Full Article: US DAILY BRIEF
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