Market News & Analysis

Top Story

Good News?? Initial Claims Only 4.4 Million

Initial Claims released earlier today showed that 4,427,000 Americans filed for initial jobless claims for the week ending April 18th vs an expectation of 4,200,000 and 5,237,000 last. There have now been over 25,000,000 Americans apply for Initial Jobless claims over the last 5 weeks!

Before the coronavirus lock down began, initial jobless claims remained relatively stable between 200,000 and 300,000. A “big miss” was considered a 30,000 difference between expectations and actual! Having said that, is this initial claim reading of 4.4 million considered “Good” news? Looking at the data over the last few weeks, the 4.4 million who applied for jobless claims has been the lowest since the March 29th reading, as many states did not impose the Stay at Home mandate until April. The good news is that the number of new initial jobless claims are trending lower. The bad news is that the number is still extremely high! There have been talks of “re-opening” the economy on a state by state basis, however that will be done in phases. As people begin to go back to work, the net number of people filing for claims should go lower.

Source: Trading Economics

To help ensure that initial claims will continue to decrease, Congress is expected to vote today on a new spending bill worth roughly $485 billion that will help small businesses under the Payroll Protection Program (PPP). This program was recently depleted of the $349 billion initially granted for the program. It allows for certain businesses of less than 500 employees some loan forgiveness, as well as new loans for line items such expenses, including payroll. In addition, President Trump signed an executive order yesterday to temporarily suspend immigration into the United States and “ensure that unemployed Americans of all backgrounds will be first in line for jobs as our economy reopens.”  There is a long list of exemptions, however the goal is to keep Americans at work and off employment.

With the economy hopefully  “reopening” soon, the new funds in the PPP and the President’s immigration executive order, traders would hope that the 6,867,000 people that filed for the week of March 29th will be the highest ever! The longer the US economy remains “closed” and the longer the it takes to get the coronavirus under control, the more who people will need to apply for unemployment benefits. 


Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.