Jobless Claims and Existing Home Sales Rise While Dollar Gains on ECB Uncertainty

The third and final (thankfully!) presidential debate was held last night, and there were no noticeable financial market reactions today.

US markets did respond to mixed economic data yet again today with the focus on the release of the weekly initial jobless claims and September’s existing home sales.  Jobless claims reported a 13,000 increase from the revised previous week’s figure of 247,000.   The 260,000 level came in above median forecasts of 250,000, but remained under the 300,000 threshold associated with a robust labor market.  The impact from Hurricane Matthew was initially cited as the potential driver behind the rise in claims, but results from the three most affected states, Florida, Georgia and South Carolina, displayed minimal weekly changes.  Upbeat housing data conveyed a rise in existing home sales for September after declines in the previous two months.  A 3.2% increase to an annualized rate of 5.47 million units was reported by the National Association of Realtors, well above expectations of a 5.35 million pace.  Highlighted in the report were first-time home buyers, who accounted for 34% of the transactions, the largest participation since July 2012.

Abroad, the latest ECB meeting concluded today with the decision to leave the current monetary policy unchanged, as was generally anticipated.  In an interview afterwards, Mario Draghi briefly rattled markets by stating that an extension to the current 80 billion euro per month bond buying program scheduled to end March 2017 was not even discussed, but he later clarified that bond purchases would likely stop abruptly without a prior tapering period.  The next ECB meeting in December is expected to produce a clearer future plan of action that will depend largely on the euro zone’s inflation results between now and December.  While current consumer prices are at a two-year high in the region, much of the recent rise has been attributed to the rebounding of oil rather than core price growth.  After trading lower for most of the day, European stocks finished marginally higher on the day, while the euro fell to a four-month low against the dollar.    

All three major U.S. stock indexes finished just below on for the day while Treasury yields/swap rates are up 1-3 bps across the curve.  Crude oil pared the bulk of yesterday’s gains with WTI down 2.25% to $50.40/barrel and Brent 2.70% lower to $51.25/barrel.