US continuing jobless claims totalled 1.841 million for the week ending 20 March. This was above the forecast of 1.84 million.
The actual figure was 0.001 million higher than expected. That equals an extra 1,000 claims compared with the estimate.
Continuing Claims Early Signal
Looking back, the continuing claims data from March 20, 2025, which came in at 1.841 million, was a subtle but important early signal. While barely a miss against the 1.84 million expectation at the time, it began an upward trend we now see confirmed. Today, with the most recent March 2026 continuing claims figure pushing toward 1.96 million, that early softness has become a clear market theme.
The sustained increase in jobless claims is creating more market uncertainty, which we see reflected in the VIX holding steady in the 18-19 range. This suggests that buying volatility could be a prudent strategy for the coming weeks. We should be considering long positions in VIX call options or outright puts on the SPX to hedge against potential downturns fueled by weakening labor data.
This persistent labor market softness increases the probability of Federal Reserve rate cuts later this year, a view supported by the 10-year Treasury yield dropping to 3.85% last week. Traders should therefore look at long positions in interest rate futures to capitalize on falling yields. Call options on bond ETFs like TLT offer another way to express this view as the market prices in a more dovish Fed.
Sector Positioning And Relative Winners
The economic slowdown is not impacting all sectors equally, and we should position for this divergence. Historically, consumer staples and utilities outperform during periods of rising unemployment, so we are looking at call spreads on ETFs like XLP. Conversely, we can use put spreads on cyclical ETFs like XLI to hedge against a decline in industrial activity.
