NEW YORK New claims for unemployment benefits rose last week to their highest level since January, a development that could raise fears the labor market recovery was stalling after job creation slowed in March.
ERIC GREEN, CHIEF ECONOMIST, TD SECURITIES, NEW YORK
"Jobless claims were a lot higher than the market was looking for. The market was looking for it to go down by 2000-3000. It's very difficult to know the extent to which that's driven by seasonal effects from Easter or not. This is not a game changer, this does not confirm the weakness in the report we saw last Friday. We suspect that much of the increase was due to seasonal issues and we would therefore expect it to drift lower."
"The trade data is a lot better than expected. There was a big improvement in the real trade deficit, so I think it's reasonable to expect a modest tailwind to growth in Q2 coming from the trade data, as opposed to a modest headwind. I think this puts GDP at 2 percent or higher."
THOMAS SIMONS, MONEY MARKET ECONOMIST AT JEFFERIES & CO. IN NEW YORK
"Claims were the highest in almost three months and inflation pressures appear to be easing off (at least as measured by PPI). These two data points will add more fuel to the fire for the debate over QE3. However, the trade balance came in much narrower than expected so Q1 GDP might not be as weak as many of the forecasts out now would indicate (current consensus ~ 2%)."
JOSEPH TREVISANI, CHIEF MARKET STRATEGIST, WORLDWIDE MARKETS, WOODCLIFF LAKE, NEW JERSEY
"The weaker-than-expected jobless claims numbers reinforce the negative non-farm payroll number from last month. This will keep the dollar on the defensive as it brings up another stimulus response from the U.S. Federal Reserve."
JOHN CANALLY, INVESTMENT STRATEGIST, LPL FINANCIAL, BOSTON
"The blip in claims is due to Easter. It came in well above expectations. We had an earlier Easter this year. I expect it to come down next week."
VIMOMBI NSHOM, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS
"The March PPI report suggests that this year's push in energy prices, which were expected to temporarily elevate inflation pressure, will not be as damaging to market prices this time around, as the PPI was flat in March, while core PPI was up 0.3%. Energy prices actually fell by 1%, it's largest decline since October last year. Additionally supportive to the argument that H1 2012 will not be a repeat of H1 2011 is the fact that prices slowed to annual growth of 2.8%, compared to January's 12-month pace of 3.3%, and in general decelerated annual price growth in the PPI reports at the end of 2011."
STOCKS: U.S. stock index futures pare gains.
BONDS: U.S. Treasury debt prices turn positive.
FOREX: Dollar pares gains versus yen, extends losses versus euro.
(Americas Economics and Markets Desk; +1-646 223-6300)