Insights 
VT 
New applications for unemployment insurance in the US went down to 228,000 for the week ending 3 May, as recorded by the US Department of Labor. This was slightly below initial forecasts and lower than the previous week’s unrevised 241,000.
The seasonally adjusted insured unemployment rate was reported at 1.2%. Additionally, the four-week moving average increased by 1,000, reaching 226,000 from the prior week’s unchanged average.
Continuing Jobless Claims
Continuing Jobless Claims decreased by 29,000, reaching 1.879 million for the week ending 26 April.
The US dollar continued its upward momentum on Thursday, remaining around the 100.00 mark, after building on gains from Wednesday.
These figures reflect a mild easing in labour market pressures. Initial claims have dipped, suggesting fewer new layoffs. Fewer people are seeking benefits for the first time, and the downward revision in continuing claims reinforces some stability in job retention. While the increase in the four-week moving average appears marginal, it may signal that short-term improvements aren’t yet robust. We’re not looking at a clear direction yet, but rather minor adjustments that still require monitoring in context.
The drop in continuing claims—almost 30,000 fewer individuals staying on unemployment benefits—could be an early indication that displaced workers are finding new roles reasonably quickly. Or, at the very least, fewer individuals are being released from existing ones. This helps bolster expectations for household spending resilience, which remains a large driver of broader US economic activity.
Economic Projections and Market Reactions
Jefferies’ economic team had assumed slightly higher claims, so the deviation from those projections suggests the hiring environment isn’t cooling as quickly as some had expected. When we digest these numbers, we need to question how markets absorb signals about Fed rate expectations. If employment remains steady, that could delay rate cuts some assumed might arrive later this year. Short-term interest rate expectations will likely become more sensitive to incremental shifts in jobless data, since inflation shows only tentative signs of softening.
As for the dollar, its strength—clinging to elevated levels after back-to-back gains—implies that currency markets are still pricing in a more restrictive monetary environment compared to trading partners. This resilience follows the sterner tone from Fed officials earlier in the week, implying that rates could remain higher for longer unless there’s a convincing decline in both inflation and wage pressures.
In practical terms, while headline claims dipped, the broader picture hasn’t shifted decisively in one direction. We should treat rallies in dollar-denominated assets with some caution. For shorter-duration options or leveraged positions, pricing volatility around key economic prints could offer tactical entries, though exposure should lean towards moderate rather than aggressive.
It’s worth noting that although these labour numbers don’t scream weakness, they don’t scream acceleration either. This keeps rate expectations somewhat balanced, holding swaps markets in a mode of recalibration rather than enthusiasm. From our perspective, curves showing a steeper decline in Federal Reserve rates by year-end might prove overconfident if these employment trends remain intact.
Next week’s inflation figures, combined with upcoming commentary from policy officials, will likely shape volatility in funding markets. We are approaching summertime, when liquidity tapers and order books thin out, so noise-driven swings could appear more exaggerated. For this reason, reliance on headline figures only—absent of revisions and context—will be the fastest way to misprice exposure. This short period ahead remains a test of patience and positioning.
