US initial jobless claims numbers yesterday surged by 22000 to 231000 on the week ending 4th May, sharply above market expectations of 210000. This high reading ended the streak of four downside surprises and hinted at weakness in the US labor market. On the back of this support for the case for US interest rate cuts, shares in Asia rose overnight after an upbeat session in the US also. The S&P 500 closed 1% off its all time high yesterday; the Hang Seng hit its highest levels since September and equities in Japan, South Korea and Australia all climbed. Treasuries were steady - 10y yield remaining around 4.45%. Officials have been quick to dampen spirits - San Francisco Fed President Mary Daly saying it may take 'more time' to return inflation to their goal.
Yesterday the Bank of England also left interest rates unchanged at 5.25%, a move that surprised no one. However, 2 committee members did prefer to cut by 25bs (compared to only one member in previous meeting). The swap market currently has a cut priced in by the August Bank of England meeting.
Today is a relatively quiet day on the data front we have GDP growth rate in the UK, Canadian unemployment data, and in the US, Michigan Consumer Sentiment.
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