By Rom Badilla, CFA – Bondsquawk.com

Initial jobless claims for the week ending August 21 fell to 473k people from an upwardly revised 504k in the previous week.  Forecasters expected the number of people filing for first time unemployment benefits to be lower as evident by the Bloomberg’s consensus surveys of 490k people.  While the drop is encouraging especially after last week’s spike to the 500k level, initial claims have mostly hovered between 450k and 475k since the end of last year. The 4-week moving average for initial claims inched up by slightly over three thousand to 486.75k, which is still associated with further job losses as has been the case in prior recessions as opposed to an average of 400k that coincides more with job creation. Hence, today’s outcome should point to a weaker August employment report released next week. Market forecasters are expecting Non-Farm Payrolls for August to show job losses of 106k and the Unemployment Rate to tick higher by a tenth of a percent to 9.6 percent.

Initial Jobless Claims & 4-Week Moving Average – Historical Chart

In addition, Continuing Claims continue to be volatile for the week ending August 14 as claims decreased 62k to 4.456 million people.  The number of people that continue to access federal assistance was below surveys as forecasters expected 4.495 million people.  Claims should continue its downward trend over the intermediate term as people exhaust their government benefits and reach the 99-week maximum.

Reaction to today’s economic data is relatively subdued. Yields across the curve are mostly flat from yesterday with the 2-Year trading at 0.52 percent and the 10-Year hovering its recent lows of 2.53 percent.