Jobless Claims Decreasing

Jobless Claims Decreasing

We got Initial Jobless Claims in this morning with an optimistic headline; however, there may be some underlying issues. The headline showed a 75k drop in initial claims from last week. Because it was Thanksgiving week and many are preoccupied with the holiday, it is likely filing for unemployment was pushed off until this week – so we should expect to see a jump in next week’s number. However, Continuous Claims also showed a large drop of 569k people. This number is a combination of both people falling off because their benefits have expired and people who are going back to work. Now, it is important to consider the fact that employers are hesitant to lay off employees during the Holiday season – they do not want to be seen as insensitive. So, it is usual to see a spike in layoffs leading up to NOV/DEC and then another in early JAN. We saw an increase in claims about 2 weeks ago which falls in line with this pattern. We will consider this as we get unemployment figures through the rest of the year.

 

Mortgage rates are declining after the early week jump. We are still holding a locking bias as we do not have a floor of support near current mortgage backed securities.

Have a good afternoon!