Overseas Headlines – November 16, 2017


U.S. Jobless Claims at Six-Week High Amid Holiday Volatility

U.S. filings for unemployment benefits rose to a six-week high, a move that may partly owe to volatility around the Veterans Day holiday, Labor Department figures showed Thursday.

Highlights of Jobless Claims (Week ended Nov. 11)

  • Jobless claims increased by 10k to 249k (est. 235k)
  • Continuing claims fell by 44k to 1.86m in week ended Nov. 4, lowest since Dec. 1973 (data reported with one-week lag)
  • Four-week average of initial claims, a less-volatile measure than the weekly figure, rose to 237,750 from the prior week’s 231,250

Key Takeaways

Claims figures tend to be volatile around weeks containing a holiday, as Labor Department statisticians adjust for seasonal factors. New York, Minnesota and California had the biggest increases in unadjusted claims last week. Even with the increase, applications for jobless benefits continue to hover near the lowest level in more than four decades, signaling employers are reluctant to reduce their headcount amid difficulties finding qualified workers and a 16-year low in unemployment. Weekly claims below 300,000 are considered a healthy snapshot of the job market.

Other Details

  • Prior week’s reading unrevised at 239,000
  • Unemployment rate among people eligible for benefits fell to 1.3 percent in week ended Nov. 4 from 1.4 percent
  • Virgin Islands had estimated claims last week, as procedures continue to be “severely disrupted” after hurricanes, according to the Labor Department; Puerto Rico’s claims processing has improved and is now processing backlogged claims






China’s U.S. Treasury holdings decline in September: data

China’s holdings of U.S. Treasuries declined for the first time in eight months in September, after hitting their highest since July 2016 in August, data from the U.S. Treasury Department showed on Wednesday. China’s Treasury holdings fell to $1.18 trillion, from $1.2 trillion in August. The world’s second largest economy, however, remains the largest non-U.S. holder of U.S. Treasuries. Since January, China has added nearly $130 billion in U.S. debt. Analysts had said China had been buying Treasuries for the most part of 2017 to counter the strengthening of the renminbi. The Chinese currency has gained about 4.7 percent against the dollar so far this year, after falling 6.5 percent in 2016. China had to sell some of its U.S. Treasury holdings for most of last year as the yuan weakened amid a surge in capital outflow. Japan, meanwhile, was the second-largest non-U.S. holder of Treasuries, with $1.09 trillion, slipping $5.07 billion for the month. Global central banks overall increased their holdings of Treasuries to $6.32 trillion in September, from $6.27 trillion the previous month. Data also showed foreigners bought Treasuries for a second straight month.




French yields approach German levels on rosy euro zone prospects

The premium investors demand to hold French debt over German peers fell to the lowest in 2-1/2 years on Thursday, nearing record lows. A rosy economic outlook for the euro zone and the European Central Bank’s easy monetary policy have compressed such bond yield spreads. Since the ECB said in late October it would extend its bond-buying scheme until at least September 2018, the gap between the yields of lower-rated euro zone government bonds and benchmark German debt has been shrinking. This “spread tightening” was given fresh impetus in recent weeks as data showed the euro zone grew a hefty 2.3 percent year-on-year in the third quarter of the year. “The fact that the ECB extended (bond-buying) by 9 months helps create the appetite for semi-core debt and also it looks very attractive for Japanese investors as an alternative to U.S. Treasuries,” said ING strategist Martin van Vliet. Japanese investors are traditionally one of the largest international lenders to France, owning over 12 percent of French government bonds at the end of last year.