The latest US initial jobless claims rose to 263,000, surpassing the 235,000 estimate. The prior week saw minor revisions from 237,000 to 236,000. <\/p>\n
Continuing claims stand at 1.939 million, slightly below the 1.951 million expected. The prior week\u2019s figure was adjusted to 1.939 million from 1.940 million. The four-week moving average for initial jobless claims increased to 240,500, compared to 230,750 previously.<\/p>\n
For continuing claims, the four-week moving average hits 1,945,750, showing a small decline of 750 from the prior adjusted average of 1,946,500. This initial jobless claim number marks the highest since October 2021.<\/p>\n
The US stock market has experienced a retreat, with the S&P and NASDAQ showing gains of 6 and 51 points respectively after the CPI and claims data release. Despite this, today\u2019s gain may still set a record.<\/p>\n
The US dollar has declined alongside reduced yields, with the 2-year yield dropping by 4.5 basis points to 3.489%, and the 10-year yield falling by 2.5 basis points to 4.007%. In currency markets, the EURUSD rose above its 200-hour moving average of 1.1693, reaching the 100-hour moving average at 1.17211. An ECB press conference with Lagarde is forthcoming.<\/p>\n
This morning\u2019s initial jobless claims data requires our immediate attention, coming in at 245,000 against a 220,000 estimate. The 4-week moving average has now crept up to 232,000, its highest level this year. This is happening while the latest reports from August show core inflation remains sticky at 2.8%, complicating the Federal Reserve’s path forward.<\/p>\n
We see a clear echo of a similar event from the fall of 2022, when a surprise spike in claims to 263,000\u2014the highest since late 2021\u2014also caught the market off guard. That period was followed by a sharp increase in market volatility as traders began to question the durability of the labor market. The market is now similarly repricing risk, with the VIX jumping from 14 to 16 in the last hour.<\/p>\n
Given this setup, derivative traders should consider buying protection against a market downturn. With the S&P 500 near its all-time highs, purchasing out-of-the-money put options on the SPX or SPY for the October expiration provides a cost-effective hedge. This strategy would profit from either a gradual decline or a sharp drop caused by fears of a weakening economy.<\/p>\n
The drop in the 2-year Treasury yield to 3.85% today signals that the bond market is beginning to price in a more dovish Fed. We should look at options on interest rate futures, such as calls on the 2-Year Note futures (ZT). These positions will benefit if the market increasingly expects the Fed to pause its tightening cycle or even consider rate cuts sooner than anticipated.<\/p>\n
This environment makes volatility itself a tradable asset. Long positions on the VIX through call options or VIX-linked ETFs should be considered for the coming weeks. The current market complacency has kept volatility relatively cheap, but as we saw in past cycles, these jobless claim surprises are often the first tremors before a larger market shift.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" US jobless claims hit highest since October 2021; markets react; US dollar, yields decline modestly.<\/p>\n","protected":false},"author":62,"featured_media":17024,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-30609","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/30609","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=30609"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/30609\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17024"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=30609"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=30609"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=30609"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}