Markets Fluctuate Ahead of April Payrolls Release

US stocks appeared poised to close higher for the first time this week before paring most gains in afternoon trading, while Treasuries fluctuated throughout the day as investors digested higher oil prices and more sluggish economic data.  WTI and Brent crude both traded up over 2% (before later trimming gains) after a massive wildfire in Canada and escalating violence in Libya raised concerns over near-term supply.  On top of that, the US government’s weekly production report released Wednesday showed US output slowed last week to its lowest level in 18 months.  US output has now declined for 11 consecutive weeks, a trend that should help alleviate some concern over the global supply glut.  Brent’s premium over WTI crude continues to diminish and is currently sitting at the smallest spread in six weeks.

Today’s US economic data disappointed, one day ahead of the all-important April payroll release.  The number of Americans filing for unemployment benefits increased more than expected last week, posting the largest gain since February 2015.  Economists were expecting an increase of 3,000 new claims versus the 17,000 realized today.  Despite the unexpected rise, the 274,000 claims number is still considered healthy from a historical perspective.  Claims have now been below 300,000 for 61 consecutive weeks, the longest stretch since 1973.  The claims data won’t impact tomorrow’s employment report as it falls outside of the survey period.  Separate data showed a 35% surge in planned layoffs by US-based employers.  Not surprisingly, the energy sector announced the most cuts, followed by the information technology and retail sectors.

All three major US stock indexes are currently down less than 0.25%, while Treasury yields and swap rates are down 2-4 bps across the curve.