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July 11, 2013

Jobless Claims up. Bernanke undoes Damage by Bernanke.

July 11, 2013

Jobless Claims up. Bernanke undoes Damage by Bernanke.

Initial Jobless Claims  (week ended 7/6/2013)

– New Claims  (seasonally adjusted) 360,000. Previous week revised to 344,000.

– 4-week Moving Average 351,750.  Previous was 345,750

– Unadjusted Initial Claims totaled 384,829 in the week ending July 6, an increase of 49,778 from the previous week.

Import/Export Prices (June 2013)

– Export Prices Month/Month -0.1%

– Export Prices Year/Year +0.8%

– Import Prices Month/Month -0.2%

– Import Prices Year/Year  +0.2%

Yesterday Bernanke said that “If you put all of that together, you can only conclude that highly accommodative monetary policy for the foreseeable future is what is needed for the U.S. economy…”  he also in a relatively minimal fashion laid the blame on fiscal policy (higher taxes, less spending.)  In essence the Fed recognized that its previous statement that there would be tapering of QE hit Treasury prices rather hard and sent yields up.

I believe that to some extent what we have here is the downside of insisting that the Fed be more open about expressing its policy intentions. Bernanke said what he thought, Treasury markets tanked, and he had to take it back.

For me, the issue is non-existing.  The Fed has expanded money supply to an enormous extent this calendar year and almost the entirety of that expansion is still parked at the Fed as excess reserves. Money supply is not the problem.