Daily Market Color

Falling Jobless Claims Push Rates Higher

Equities close higher as earnings season continues
Major indices closed higher on record volume despite a pullback from the handful of stocks affected by trading restrictions – the S&P 500 and DJIA both climbing 1%.  Meanwhile, disappointing Q4 GDP data was offset by falling jobless claims – helping push Treasury yields and swap rates higher across the curve – the 10-year UST yield ultimately climbing 3 bps on the day to 1.04%.
US GDP grew at a 4% annualized pace in Q4, falling below economist expectations
Personal consumption expenditures, which makes up 68% of US economic activity, rose 2.5% in Q4.  Overall, GDP contracted 3.5% in 2020, the worst year since the end of World War II.  In Q2, the economy contracted a record 31.4% and rebounded 33.4% in Q3.
847,000 initial jobless claims were filed last week, down from 914,000 the week prior
While claims are still elevated, the figure is significantly lower than 926,000 from the week of January 9th, the highest reading since August.  The four-week moving average now sits at 868,000.
New home sales rose 1.6% in December after declining 12.6% in November
Low mortgage rates continue to drive sales, but limited home supply and labor push prices higher.  Despite November’s significant drop, overall 2020 sales were up 19% from 2019’s figures.
US international trade deficit narrowed to $82.5 billion in December
The deficit decreased from November’s $85.5 billion after exports increased by 4.6%.


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