Prospects Daily: U.S. initial claims for unemployment drop to the lowest level in four years

Important developments today:

1. U.S. Treasury yields climb from one-week low following better-than-expected jobless data

2. U.S. initial claims for unemployment drop to the lowest level in four years

 

U.S. Treasury yields climb from one-week low following better-than-expected jobless data. U.S. Treasuries edged down on Thursday after the U.S. jobless claims fell last week to a near four-year low, fueling speculation that the U.S. job markets is on the mend and damping demand for the relative safety of government bonds. In earlier trading the yield on the benchmark 10-year security traded at close to a one-week low as continued delay in securing a second bailout package for Greece prompted concerns over a possible disorderly default and supported demand for haven assets. However, after the U.S. government released data on claims for jobless benefits, yields on 10-year bonds climbed 3 basis points (bps) to 1.96%, while yields on 30-year securities rose 3 bps to 3.11%. Meanwhile, the U.S. Treasury Departments plans to auction $9 billion of 30-year Treasury Inflation Protected Securities today and announce the size of next week’s sales of 2-, 5-, and 7-year securities.

U.S. initial unemployment claims fall to near four-year low. In continued signs of improvements to the U.S. labor market and economy, the number of people receiving unemployment benefits has fallen to near four-year lows. For the week ending February 11th, weekly unemployment claims fell by 13,000 to a seasonally adjusted 348,000, and the closely watched four-week moving average, which gives better idea of trends by removing weekly volatilities fell by 1750 to 365,250 .  [see Chart at http://prospects or http://www.worldbank.org/prospects]. Indeed, for the fourteenth successive week the four-week moving average has stayed below the critical 400,000 mark suggesting that the weak US labor market is on a sustainable mend. Indeed, the unemployment rate has fallen for five months in succession (from 9.1% in August 2011 to 8.3% in January 2012) during which time some 746,000 jobs have been added.

Improvements in the US labor market, along with near record low mortgage rates is positively impacting the US housing market – the weakest link in the ongoing recovery. In a release by the Commerce Department today, housing starts increased to a seasonally adjusted rate of 699,000 in January. Momentum growth in the construction of new homes has been positive in recent months climbing to 12.4% (3m/3m) in the three months leading to January up from -1.7% in June 2011.

Among Emerging Markets

In East Asia and the Pacific, Malaysia’s economy grew by 5.2% year-on-year (y/y) in the third quarter of 2011 and by 5.1% for the year as a whole, boosted by robust domestic consumption and investment demand despite a negative external environment. 

In Europe and Central Asia, Bulgaria’s consumer price index (CPI) inflation decelerated to 2.3% in January, the lowest in more than a year, from 2.8% in December. Bulgaria also posted a current account surplus of 1.9% of GDP in 2011, a sharp improvement from a deficit of 7.7% in 2010, helped by strong export performance and relatively restrained imports due to slack domestic demand. 

In Sub-Saharan Africa, Ghana’s central bank increased its key lending rate 100 basis points to 13.5%, the first increase in over six months, citing the need to contain inflationary pressures and create demand for domestic financial assets.