Good Thursday AM,

Lots of economic news released this morning and it was almost all bullish. The catch is that not much of what was released today is considered high impact to the markets. The biggest news was that weekly jobless claims at 8:30 am ET, down 26K to 360K, a new pandemic low. Initial claims remain above pre-pandemic levels, and employers continue to point out trouble with finding qualified workers. Here is the silver lining…  An increasing number of state governors are ending the checks. States including Minnesota, Mississippi, and Wyoming — which have ended Pandemic Unemployment Assistance for self-employed workers — saw no initial claims in that program last week.

That both import and export prices came in so low bodes well for the expectation inflation has peaked or is peaking. The charts look bullish, but we are going to face some resistance today, and I am not sure we will see a break above it until after we see tomorrow’s retail sales number. If retail sales show signs of slipping, we could see a nice move up in bond prices. Of course the opposite is true and you should caution your clients about floating through the news tomorrow.

A bit more on Fed Chairman Powell’s testimony to Congress. The big question is how the Fed will handle elevated inflation. The Federal Reserve chairman said inflation, which has jumped in recent months, would likely remain at elevated levels for the near future. On Wednesday, Powell told the House Financial Services Committee that inflation “has been higher than we’ve expected and a little bit more persistent than we had expected and hoped,” but that part of the run-up in prices stemmed from supply bottlenecks in industries like auto sales. Higher prices for used cars were responsible for about one-third of the overall 5.4% increase last month in the consumer price index, the fastest increase in 13 years. Powell said the Fed wouldn’t raise interest rates in response to what it sees as a one-time price increase and added that pricing pressures should ease once the supply pressures do. He is set to return to Capitol Hill today for a second day of testimony on the economy and monetary policy… and that’s why rates have improved the last two days

Stimulus keeps on a comin’. 39 million — The approximate number of households, representing 88% of U.S. children, that are set to begin receiving checks as part of the expanded child-tax credit starting today. Families with children under age 6 will get $3,600 per child, and families with kids between ages 6 and 17 will receive $3,000 per child, paid over 12 months. The credit will cost the government $100 billion this year.

Please remain safe and healthy, make today great!