It's not over yet.
A slew of good news had the markets almost ready to celebrate the end of the U.S. recession. They may have to think again, based on today's report on U.S. jobless claims.
According to the U.S. Department of Commerce, 447,000 people filed for first-time jobless benefits in the week ended December 28th. That's way above the market's expectations of 392,000 new claimants. Even worse, the figures for the previous week were revised up to 411,000 from the previous estimate of 392,000.
It's been a rough year for the U.S. labour market. A year ago it still looked stellar. Then, the layoffs started.
U.S. jobless claims climbed steady through 2001, then spiked in the weeks after September 11th. Since then, there has been a measured decline in the number of people seeking benefits. Although that has not been completely revised away, the improvement now looks a bit more subdued than it did.
Which makes tomorrow's release of U.S. non-farm payrolls-a nail-biter at the best of times-that much more nerve-wracking.
The markets expect to hear that the U.S. lost another 150,000 jobs in December, taking the 2001 total to above 1 million. With today's figures, the numbers tomorrow could be worse still.
Then again, gloom is what drives bonds.
With the bleak jobs data, bond prices in both Canada and the U.S. moved up. The markets had started to figure on economic recovery and rising rates. If the worst days are still to come for employment, it's think-twice time.
U.S. non-farm payrolls are to be released at 8:30 a.m. EST Friday morning.
Stay tuned.