Jump in Weekly Jobless Claims Raises Concerns About Decelerating Labor Market

U.S. Treasury yields continued to drop on Thursday in reaction to the dovish tone set by the U.S. Federal Reserve the previous day. On Wednesday, in a widely expected move, the Fed left its benchmark interest rate unchanged. However, it also signaled to investors that it was willing to pause in its tightening cycle, stressing “patience” in making future interest rate decisions.

On the close, the yield on the benchmark 10-year Treasury note was lower at around 2.658 percent, while the yield on the 30-year Treasury bond was also lower at 3.017 percent.

The 2-year Treasury note remained inverted against the 5-year Treasury note. The yield on the 2-year fell 5 basis points to 2.492 percent and the yield on the 5-year note was at 2.468 percent.

U.S. Economic News

According to a report released on Thursday, U.S. employers announced plans to cut 52,988 jobs in January. Job cuts in January climbed 20.7% from 43,884 in December 2018, and 18.7% higher than 44,653 job cuts in the same month last year, consultancy firm Challenger, Gray and Christmas said.

“Employers are continuing the trend of reducing staff that we saw in the fourth quarter of last year, as several industries pivot to emerging technologies,” the firm’s vice president Andrew Challenger said.

In another report, the Labor Department said wages and salaries for American workers rose more than 3 percent over the past year. This marked the first time that threshold has been broken in more than 10 years.

The employment cost index, which the Bureau of Labor Statistics releases quarterly, showed a 3.1 percent gain in the wages and salaries component in the fourth quarter of 2018. That was up from 2.9 percent in the third quarter.

The weekly unemployment claims report showed the number of Americans filing applications for unemployment benefits climbed to near a 1-1/2 year high last week, raising concerns that the labor market could be decelerating.

Initial claims jumped 53,000 to a seasonally-adjusted 253,000 for the week-ended January 26. This was its highest level since September 2017.

New home sales rebounded in November to the strongest pace in eight months as lower prices helped to attract more buyers.

Single-family home sales increased 16.9 percent from the prior month to a 657,000 annualized pace, according to government data. That exceeded economist estimates and compared with October’s upwardly revised 562,000 rate.