Thursday, May 27, 2021

Jobless Claims Lower, GDP Revised Lower

Weekly initial jobless claims came in at a level of 406,000 for the week ended May 22, below the Bloomberg consensus estimate of 425,000 and the prior week's unrevised 444,000 level. The four-week moving average fell by 46,000 to 458,750, and continuing claims for the week ended May 15 dropped by 96,000 to 3,642,000, south of estimates of 3,680,000. The four-week moving average of continuing claims dipped by 2,750 to 3,675,000.

April preliminary durable goods orders declined 1.3% month-over-month (m/m), versus estimates of a 0.8% rise and compared to March's upwardly-revised 1.3% increase. However, ex-transportation, orders grew 1.0% m/m, above forecasts of a 0.7% gain and compared to March's favorably-adjusted 3.2% rise. Orders for non-defense capital goods excluding aircraft, considered a proxy for business spending, were up 2.3%, compared to projections of a 1.0% rise, while the prior month's figure was revised higher to a 1.6% increase.

The second look (of three) at Q1 Gross Domestic Product, the broadest measure of economic output, showed a q/q annualized rate of expansion of 6.4%, unrevised from the first release's figure and versus forecasts of an upwardly-revised 6.5% gain. Q4's figure was unadjusted at a 4.3% increase. Personal consumption was revised to an 11.3% increase, north of expectations of an upwardly-revised 10.9% rise. Q4 consumption was unadjusted at a 2.3% gain.

On inflation, the GDP Price Index was revised to a 4.3% rise, versus estimates of an unadjusted 4.1% increase, while the core PCE Index, which excludes food and energy, was adjusted higher to a 2.5% gain, compared to forecasts of an unchanged 2.3% increase.

Inflation Returns
Source: Schwab Center for Financial Research with data from Bloomberg and Morningstar, using monthly data through March 2021. Each index has a different start date, so not all average total returns have the same amount of data points. Please see footnote for start date for each index used. Indexes included are: S&P GSCI Index (Commodities), Gold United States Dollar Spot (Gold), ICE BofA U.S. Mortgage Backed Securities Index (MBS), S&P 500 Index (S&P 500), Ibbotson US 30-day  Treasury Bill Index (1-month Treasury Bills), Bloomberg Barclays U.S. Corporate Bond Index (Investment Grade Corporates), MSCI EAFE Net Total Return USD Index (International Stocks), ICE BofA U.S. Municipal Securities Index (Municipal Bonds), Bloomberg Barclays U.S. Corporate High Yield Bond Index (High-Yield Corporates), Bloomberg Barclays U.S. TIPS Index (TIPS), Ibbotson US Intermediate-Term Government Bond Index (Intermediate-term Treasuries), and Ibbotson US Long-Term Government Bond Index (Long-term Treasuries). Total returns assume reinvestment of interest or dividends plus capital gains. Note that TIPS are not included in the “inflation >4%” chart as there were no instances of inflation above 4% given the short history of the TIPS index Past performance is no guarantee of future results.

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