U.S. weekly initial unemployment claims fell by -25,000 to 234,000, more than expectations of -8,000 to 250,000 and a 5-week low. Weekly continuing claims fell -24,000 to 2.028 million, slightly more than expectations of -22,000 to 2.030 million.
ECB President Draghi said, “we have not yet seen sufficient evidence to materially alter our assessment of the inflation outlook” and that “a reassessment of the current monetary policy stance is not warranted at this stage.”
German Feb factory orders rose +3.4% m/m, weaker than expectations of +4.0% m/m.
Market closes
Stock Market — The S&P 500 on Thursday closed higher: S&P 500 +0.19%, Dow Jones +0.07%, Nasdaq +0.04%. Bullish factors included (1) carry-over support from a rally in European stocks after ECB President Draghi signaled the ECB will continue with QE when he said, “a reassessment of the current monetary policy stance is not warranted at this stage,” (2) the -25,000 decline in U.S. weekly jobless claims to a 5-week low of 234,000, more than expectations of -8,000 to 250,000, and (3) a rally in energy producers as crude oil climbed +1.08%.
Interest Rates — Jun 10-year T-notes on Thursday closed slightly higher: TYM7 +2.50, FVM7 +1.00. Bullish factors included (1) reduced inflation expectations after the 10-year T-note breakeven inflation rate fell to a 2-week low, and (2) dovish comments from ECB President Draghi that signal the ECB will continue with QE, which is supportive for government bond prices. Gains were limited on bearish factors that included (1) the larger-than-expected decline in U.S. weekly initial unemployment claims to a 5-week low (-25,000 to 234,000), and (2) the rally in stocks, which curbed the safe-haven demand for T-notes.
Forex — The dollar index on Thursday closed higher: Dollar index +0.11 (+0.11%), EUR/USD -0.0019 (-0.18%), USD/JPY +0.11 (+0.10%). Bullish factors included (1) the larger-than-expected decline in U.S. weekly jobless claims to a 5-week low, and (2) weakness in EUR/USD which fell to a 3-week low after ECB President Drahi signaled the ECB will continue with its QE program when he said, “we have not yet seen sufficient evidence to materially alter our assessment of the inflation outlook” and that “a reassessment of the current monetary policy stance is not warranted at this stage.”
Metals — Metals on Thursday settled mixed: Jun gold +4.8 (+0.38%), May silver +0.059 (+0.32%), May copper -0.0220 (-0.82%). Bullish factors included (1) comments from ECB President Draghi that signal the ECB will not end QE early, and (2) tighter copper supplies after LME copper inventories fell -3,200 MT to 270,750 MT, a 1-month low. Bearish factors included (1) a stronger dollar, and (2) the rally in stocks, which reduces the safe-haven demand for precious metals.
Energy — May crude oil and gasoline on Thursday closed higher: May crude +0.55 (+1.08%), May gasoline +0.0143 (+0.83%). Bullish factors included (1) speculation that OPEC will extend its production cuts past June, and (2) the rally in stocks, which bolsters confidence in the economy and energy demand.