Thursday Morning Cheat Sheet: 3 Stories Moving Markets



It’s Thursday, November 21, and U.S. stock futures advanced ahead of the opening bell. At 8:45 a.m., Dow futures were up 0.29 percent, S&P 500 futures were up 0.21 percent, and Nasdaq futures were up 0.32 percent.

Here are three stories to keep an eye on:

1. Japanese Monetary Policy

As expected, policymakers at the Bank of Japan left its benchmark interest rate unchanged at a range between zero and 0.1 percent to make a change to the size or nature of its asset purchase program. Japan’s central bank will continue to conduct money market operations in order to expand the monetary base at an annual rate of between 60 and 70 trillion yen in an effort to suppress longer-term interest rates and stimulate the economy through borrowing and spending. This, though, presents a problem for the nation, which already carries a total debt burden of about 240 percent of GDP. Under current conditions, the nation’s debt is expected to increase to as much as 310 percent of GDP by 2030.

“Japan’s economy has been recovering moderately,” commented the BoJ in its statement on monetary policy, released late last night. “Overseas economies as a whole are picking up moderately, although a lackluster performance is partly seen. In this situation, exports have generally been picking up. Business fixed investment has been picking up as corporate profits have improved. Public investment has continued to increase, and housing investment has also increased. Private consumption has remained resilient, with some improvement observed in the employment and income situation.”

2. U.S. Jobless Claims

Initial claims for unemployment insurance for the week ended November 16 fell a seasonally-adjusted 21,000 to 323,000. The weekly claims data came in ahead of economist expectations for a softer decrease to 335,000. The four-week moving average, which irons out some of the weekly volatility in the claims data, fell 6,750 to 338,500.

Keep in mind that the week ended November 16 was shortened due to Veteran’s Day. This means changes to the adjustments performed by government statisticians.

The accuracy and credibility of government unemployment claims data has come into question recently, but the trend — ostensibly still meaningful — is pointing clearly in one direction. The number of people filing for unemployment insurance has fallen fairly consistently since this time last year, save for a surge in October that was induced by the partial shutdown of the U.S. government.

Initial CLaims

Source: Data from U.S. Department of Labor

3. Global Purchasing Managers’ Indices

Flash PMI data released by Markit Economics on Thursday morning is a bit underwhelming, and could be a contributing factor to equity market declines in Asia and Europe.

The HSBC Flash China Manufacturing PMI for November fell from 50.9 to 50.4, indicating expansion at a slower rate than before. Manufacturing output, a component of the headline index, increased from 41.1 to 51.3, an eight-month high. Significant declines were recorded in the component indices for employment and export orders. Hongbin Qu, chief economist for China and co-head of Asian Economic Research at HSBC suggested that low inflation in China will continue to support relatively accomodative policy conditions, which should support growth moving through the end of the fourth quarter.

Meanwhile, the Markit Flash Eurozone PMI fell from 51.9 in October to 51.5 in November, again indicating expansion although at a slower rate than before. Markit chief economist Chris Williamson commented that, “Some encouragement must be gleaned from the PMI signalling expansion of the eurozone economy for a fifth successive month in November, but the average reading over the fourth quarter so far is signalling a very modest 0.2 percent expansion of GDP across the region, and it looks like momentum is being lost again.”

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