Initial Jobless Claims Around Estimates, Leading Indicators Rise, Philly Fed Falls

- Initial Jobless Claims this week rose to 372K versus estimates of 375K and 355K the prior week.

- Continuing Claims rose to 2984K versus estimates of 2950K and 2958K prior.

- Leading Indicators for March rose .1% versus estimates of a .1% rise and a .3% decline in February.

- The Philly Fed for April fell to -24.9 versus estimates of -15.0 and a reading of -17.4 in March.

BOTTOM LINE: Initial Jobless Claims for this week came in around economists’ estimates, Bloomberg reported. The four-week moving-average of jobless claims fell to 376,000 from 376,750 the prior week. The unemployment rate among those eligible to collect benefits held steady at a historically low 2.2%. I expect jobless claims to trend around current levels for a bit longer before moving lower later this quarter.

The index of leading US economic indicators rose in March for the first time in six months as cash poured into the banking system and the Federal Reserve lowered the benchmark interest rate, Bloomberg reported. The improvement is an indication that the economy may not weaken further in the second half of the year. The rise in the index last month brings the decline for the last six months to a 3.3% annual pace. A drop of 4.5% or more over six months usually correlates with a recession, according to the Conference Board. A jump in the money supply, slower supplier deliveries and a steeper yield curve were the main contributors to last month’s gain. A bounce higher in consumer sentiment and higher stock prices should help contribute to another gain in the Leading Indicators this month. I continue to believe GDP growth was slightly negative in 1Q, but will rebound this quarter into positive territory and accelerate modestly into year-end.

Manufacturing in the Philly region contracted more than forecast in April, Bloomberg reported. The New Orders component fell to -18.8 form -9.3 the prior month. The Unfilled Orders component rose to -16.8 versus -18.7 the prior month. The Inventories component fell to -26.2 versus -13.5 the prior month. The Employment component fell to -11.1 versus -4.7 the prior month. The Prices Paid component fell to 51.6 from 54.4 the prior month. The Philly Fed region is more vulnerable to auto production cutbacks than the NY Fed region, which showed a strong rebound yesterday. The Philly Fed index should bounce back next month and improve meaningfully on an end to the American Axle(AXL) strike. The 10-year yield is unch. on today’s reports and the US dollar index is rising .2%. There is now a 78% chance for a 25 basis point rate cut at the upcoming April 30^th meeting, up from 58.0% one week ago, according to fed fund futures. The odds for a 50 basis point cut have decline to 22.0% from 42.0% one week ago.