This morning’s Weekly Unemployment Claims number showed that there were only 196,000 claims last week, which sets a new nearly 50-year record as the lowest number of claims in one week. This is an extremely strong indication of an insanely tight labor force. While most are citing this as a reason that we will not experience a recession in the coming year or two, this is one of the biggest indicators that we are at the end of the expansion cycle. In every case that the labor market reached its strongest point of an expansion cycle, it was immediately followed by a strong jump higher in the number of Americans who were unemployed. Since its not reasonable to assume things can get much better than they are now, we may be at the low point in the current cycle. If that is the case, we know what’s around the corner.
The big news of the day is once again surrounding Brexit, with EU leaders agreeing to once again extend the deadline until October 31, 2019. This much needed agreement reduces fears of an immediate departure, which hopefully will provide the time for a deal to be made that will not result in a catastrophic economic event that would hurt Great Britain. This will likely help smooth out some of the volatility the US stock market would likely have experienced, so that is good news for the near-term performance of the US stock market.
Overall, the bond market is not showing much strength. I feel the safe play will be to have a locking bias.