Market Wrap – Weekly jobs data

Risk-off sentiment saw a pick-off this afternoon after jobs data pointing to the fact that the employment situation in the United States could sustain further rate hikes to get inflation down.

Data showed that the number of Americans filing new claims for unemployment benefits fell by 15,000 from the previous week to 190,000 on the week ending January 14th, the lowest in four months and well below market expectations of 214,000.

The result further consolidated evidence of a tight labour market despite the Federal Reserve’s aggressive tightening path last year, challenging market bets that the Fed will halt its tightening path before reaching the forecasted terminal rate of 5.25%.

In terms of market reaction, the US dollar index gained value as traders priced in more rate hikes, with the greenback making strides against most major currencies and especially commodity currencies.

Also, some fairly big losses were seen in the US equity space with Tesla falling by over 3 percent and the Nasdaq and the S&P500 losing around 1 percent so far.

The 4-week moving average, which removes week-to-week volatility, fell by 6,500 to 206,000. On a non-seasonally adjusted basis, initial claims fell by 53,582 to 285,575, largely due to seasonal factors. Notable decreases took place in New York (-17.196), Michigan (-5,540), and Georgia (-5,072)

The Philly Fed diffusion index for future general activity rose to 4.9 in January 2023 from a revised reading of -0.9 in December. Almost 38 percent of the firms expect increases in future activity, 33 percent expect decreases, and 26 percent expect no change.

Philadelphia Fed Manufacturing Index is based on The Business Outlook Survey of manufacturers in the Third Federal Reserve District.

Participants report the direction of change in overall business activity and in the various measures of activity at their plants: employment, working hours, new and unfilled orders, shipments, inventories, delivery times, prices paid, and prices received. The index above 0 indicates factory-sector growth, below 0 contraction.