Market Matters

This was a volatile week as we touched 2.74% on the 10-year on Wednesday, and on Thursday went back to 3%. The move lower earlier this week was due to recession fears, while the move on Wednesday was a mix of the market moving too low too fast, as well as hot ISM data and hawkish Fed minutes. Looking ahead to next week, CPI is the most important data point. Best to be defensive leading into that release.

 

Initial Jobless Claims

Initial Jobless Claims were up +4k to 235k for the week ending July 2nd vs. the prior week's revised level of 231k. Claims for the week rose to their highest levels since January 15th, even though the range this year has been relatively low vs. historical norms. Continuing claims, which lag by a week, jumped up to 1.375mln vs. the revised level in the prior week of 1.324mln.

 

ISM Services PMI

The ISM Services PMI posted at 55.3 in June, down -.6 points from the prior read of 55.9 in May, but better than the market call at 54.0. The headline number is still hovering at its weakest level since May 2020. The business activity index, however, rose +1.6 points to 56.1. New orders, exports and imports, employment, and prices paid all fell. Looking at respondent comments, while most still cited a good number of headwinds, they did not seem to be associated with growth concerns.

 

Factory Orders

Factory Orders increased by +1.6% to $543.4bln in May vs. a prior +.7% increase in April. Transportation equipment, up two consecutive months, led the headline increase, up +1.0%. Shipments, which have been higher in 24 out of the last 25 months, increased +1.8% to $544.4bln. Unfilled orders were, up 21 consecutive months now, were also higher by +.4%. The unfilled orders to shipments ratio was 5.98, down from a prior 6.05 in April. Looking at core capital goods orders, which are used to calculate business equipment spending in the GDP report, we see an increase MoM of +.6%. Shipments for these core capital goods rose +.8% for the month, the same as April.

 

Challenger Job Cuts

The Challenger Job Cuts Report showed layoffs rising to 32,517 in June from a prior 20,712 in May, and 20,476 this time last year. While this is still historically low, it is the highest print since February of last year. The labor market continues to be hot; however, this report suggests it is cooling a bit, which should lend to a low number in the BLS report for nonfarm payrolls.