The Day Ahead: Modest Pressure Ahead of Jobless Claims

Markets are more stable this morning but it’s not yet clear if they are ready to recover from the steep losses on Wednesday which pummeled the Dow by 265 points, or 2.5%. 

Investors remain concerned that growth is slowing down and that the Federal Reserve is out of options to stimulate the economy. 

“Some calm seems to have returned to financial markets after yesterday’s steep across-the-board sell-offs that pushed North American stock markets back into negative territory on a YTD basis,” said economists at BMO Capital Markets. 

Ninety minutes before Thursday’s opening bell, Dow futures are trading 8 points lower at 10,329 and S&P 500 futures are down 1.25 points to 1,083.75.

WTI crude oil is 72 cents lower lower at $77.30 per barrel, while Spot Gold is up $6.35 to $1,204.45.

Meantime, the benchmark 10-year Treasury is yielding 2.72%, or four basis points higher than the 16-month low reached yesterday in the flight to safety.

Key Events Today:

8:30 ― Initial Jobless Claims averaged 458k in July, down from 467k in June, equivalent to the 458k in May, and down from 463k in April. Despite the drop in the month, the week ending July 31 saw new claims spike to 479k, the highest level since early April (or 16 weeks ago). Economists anticipate claims to fall in the first week of August to 465k, a figure that indicates job losses at the national level.

“In spite of distortions from seasonal adjustments, the persistently high headline numbers suggest the recovery of the labor market has been very slow,” said economists at Nomura. “We believe initial claims will drift in a narrow range of 450-470k for the time being.”

Continuing claims, a tally of all those who are still receiving benefits, is expected to be 4.54 million at the end of July.

• Treasury Auctions:
• 11:00 ― 30-Year Bonds