Today’s US jobless claims print (surprising to the upside - again) is the single most important economic data point this week. In particular, how it relates to rising interest rates, which have been hugging non-seasonally adjusted (NSA) rolling jobless claims like a glove over the past six months.
US Employment equals #GrowthAccelerating.
Contrary to what a lot of Macro Tourists may be telling you, yesterday’s Q1 GDP print isn't a forward looking economic indicator. It’s rear-view mirror. NSA rolling jobless claims is what you want to be looking at. Study it. Don’t be a Macro Tourist.
For the record, we haven't had bad US economic news (yet). It’s the good news that's been wreaking havoc and wrecking Gold and Bonds.
Incidentally, Gold continues to get clobbered. It's in full-blown correction mode. Yet the knife catchers are still out there in full force, despite their peers losing eyes, ears, and lips loading up on "precious" metals. Come on already. As I wrote earlier this week, if interest rates keep rising, gold is going to have a hangover the likes of which we’ve never seen.
It's important to note that 346,000 in claims isn’t a number that ultimately matters – it’s all about the slope of the line in NSA rolling claims.
(Click to enlarge)
As you can see, NSA jobs data continues to improve at an accelerating year-over-year rate. This is the case on both a 1 week and 4 week rolling-average basis. NSA jobless claims were 9.6% better than at this time last year. It’s a continuation of what we've been seeing.
Here’s the unfortunate rub: Fed policy hinges on employment.
Now, Bill Gross’ political book pushing aside (Pimco's Grand Poobah just went on record saying "...the 10-year Treasury – may be as much as 35 basis points too cheap. They belong in our opinion at 2.20% instead of 2.55%."), the Fed should be tapering right now.
The biggest threat to both American Purchasing Power and sustainable US economic growth remains our unelected, omnipotent Central Planners at the Federal Reserve devaluing our currency. Deal with it.
The other risk of course is big bond managers talking up what’s best for their own book, not their country.