Upcoming stock markets: the job market looks much better. It’s always catching up
What’s happening: Weekly claims for unemployment benefits fell to 199,000 last week after seasonal adjustments, their lowest level since 1969. They peaked at 6.15 million in April 2020.
“Although the plunge [unemployment] Complaints were certainly welcome, it does not indicate a dramatic turning point in the labor market, ”PNC chief economist Gus Faucher said in a note to clients. “Complaints are very volatile, especially around the holidays.
The reason why demands are so low may also be linked to persistent distortions in the labor market.
“Claims tend to go down as employers keep a grip on their employees due to labor shortages,” observed Peter Boockvar, chief investment officer at Bleakley Advisory Group.
The U.S. employment report for November, due this week, will be closely watched, especially as central bankers assess their next steps.
Economists polled by Refinitiv expect more good news. They predict the economy has added 563,000 jobs, up from 531,000 in October.
The unemployment rate is expected to drop to 4.5%. It was 3.5% in February 2020.
This could give the Federal Reserve more leeway to reverse stimulus measures as it tries to contain inflation without jeopardizing the return to employment.
In a research note released Thursday, Goldman Sachs strategists predicted that the Fed would choose to step up the pace at which it is decreasing its asset purchases. They believe the central bank will announce in December that it will cut bond purchases by $ 30 billion per month from January.
This would allow the central bank to consider raising interest rates, which it said it would only do so after the gradual reduction is over, as early as March. Goldman expects the Fed to wait until June, “when some additional jobs reports become available.”
All eyes are on OPEC after falling oil prices
New restrictions in Europe to deal with a wave of Covid-19 sent even lower prices, before the emergence of a new, potentially more transferable variant last week pushed them to the brink – US oil was trading below $ 70 a barrel on Friday, compared to $ 85 at the end of October.
What happens next could depend on the Organization of the Petroleum Exporting Countries and its main allies.
The group adds 400,000 barrels per day every month. The White House wanted OPEC and Russia go faster to meet strong demand, but producers, including Saudi Arabia, have stood firm, worried about the risks the ongoing Covid-19 pandemic may pose This winter.
Analysts were already speculating that the new wave of Covid in Europe would encourage OPEC and Russia to stick to their gradual increases in supply when they meet on Wednesday and Thursday. Friday’s price drop now begs the question: will they cut production instead?
Craig Erlam, OANDA’s senior market analyst, notes that OPEC and Russia may soon feel compelled to act. “[This week] may come too soon, but another major epidemic could see them put the brakes on. “
Following
On Monday: Cyber Monday; US home sales pending; Inflation in Germany
Wednesday: ISM manufacturing index; Snowflake Gains
Friday: US employment report; retail sales in Europe; ISM non-manufacturing index
