US stocks unbothered as initial jobless claims jump to highest level since 2021, inflation print comes in mildly hotter

A much weaker-than-expected piece of labor market data, coupled with a mildly hotter-than-anticipated inflation report, took some wind out of the sails of US stocks this morning — but not for long.

Initial jobless claims unexpectedly popped to 263,000 for the week ended September 6, a near four-year high, while economists had anticipated a moderation to 235,000. It’s another piece of poor labor market data that comes on the heels of the most negative annual revision to US nonfarm payrolls since 2009 and the soft August jobs report. An outsized jump in initial claims from Texas seemingly fueled this weekly increase.

Separately, the August inflation report showed that headline consumer prices were up 2.9% year on year, with both headline and core CPI up slightly more than expected, month on month.

Two-year Treasury yields declined following these releases.

As of yesterday, the pricing of Federal Reserve interest rate policy over the next 15 months, when compared to what inflation swaps and the stock market were trading, suggested that traders did not think that more easing from the central bank would be a catalyst for an ongoing inflation problem, nor that the magnitude of cuts was symptomatic of underlying economic ills.

The recovery in the SPDR S&P 500 ETF following a knee-jerk dip in the wake of this data suggests that it’ll take a lot more evidence of negative momentum to shake that zeitgeist.