Potentially Valuable Break

The untrained eye might not see much in what happened across US financial markets on Thursday. The day started off in a sort of "sleep" mode. Many traders, even those that had not taken on a light holiday week schedule, still had candy canes dancing in their heads early on and it stayed that way until well into the afternoon. At the headline level, equities did not do much, but did manage to post a very slight "down" day, which broke the winning streak for these indices at three days.

Friday, so far, has been much uglier. The macro has been a little sloppy, which is both bad from an economics perspective, but a potemntial market positive as far as policy is concerned. Despite the weekly report for Initial Jobless Claims that printed at a less than alarming 219K new filers for state level unemployment benefits, the print for continuing claims (which runs one week behind initial claims) soared from 1.864M last week to a frightening 1.91M (seasonally adjusted for the week ending December 14th) this week.

This is the most US workers receiving continuing unemployment benefits since the week ending November 13th, 2021, and really shows just how hard it is right now to land a new job once a worker loses a job. Not quite the robust labor market that we keep hearing about.

On Friday morning, the Goods Trade Balance for November printed at a greater deficit than expected, whole Wholesale Inventories hit the tape well below consensus view and in a surprise state of contraction. This sets up the potential for a "confirmation day" of the upward change in trned that started last Friday. Remember, in order to confirm an upside chnage in trend, there has to be space in between a Day One and a Confirmation Day.