In the week ended August 14, the first seasonally adjusted jobless claims in the US were 348K, down 29K from the previous week’s revised level. This is the lowest level for initial claims since March 14, 2020, which was 256K. The previous week’s level was revised upwards by 2K, from 375K to 377K. The 4-week moving average is 377,750, down 19K from the previous week’s revised average. This is the lowest level for this average since March 14, 2020, at 225,500. The previous week’s average was revised up by 500 from 396,250 to 396,750.
The Philly index, on the other hand, fell to 19.4 in August, falling for the fourth consecutive month after reaching a long-term high reading in April. Manufacturing activity in the region continued to grow, according to firms responding to the Philadelphia August Manufacturing Business Outlook Survey. The survey’s current indicators for overall activity and shipments fell from the July readings, but the new orders indicator remained high. Also, employment gains were more widespread this month and both price indices remained high. Most future indices have been moderate this month, but continue to show that firms expect growth over the next six months.
Although we do not yet see the numerical reflection of delta variant risks on the job market, we see details such as slowdown in activity and shipments and high price indices in the Philly survey in the context of business activity. In fact, shipment, supply delays or production slowdowns, which will be the main factor in the economic slowdown, will also be the main feeder of inflation. If the economy is to slow, of course, it will have little to do with the Fed buying fewer bonds. However, the main reflection will occur in the credit market and we will see that the market increases the bond yields. The sharpness of this movement will depend on how much one is worried about inflation. If the expectation that inflation will decline over the long term remains dominant, the move will not be so drastic. The main consideration is: the economy won’t need the marginal impact of the Fed’s immediate response package of large liquidity, and once some of that liquidity is withdrawn, a sufficiently large balance sheet remains. If we recall the tapering stage 6-7 years ago; first taper tantrum plan 2013 last meeting and first rate hike 2015; there is a 1.5-year period in between. Of course, the timing of 2021 – 2023 or 2021 – 2022 may show flexibility depending on the success of the Fed.
Kaynak Tera Yatırım
Hibya Haber Ajansı
Kaynak: Hibya Haber Ajansı
