Sharp fell in jobless claims

New claims for jobless benefits dropped last week to their lowest level in four months. This might probably bolster expectations that the US Federal Reserve (FED) will start tapering its monetary stimulus this year. The better jobless data come just one day after FED Chairman Ben Bernanke made his presentation to Congress where he made the continuation of the bond buying program dependent on the “health” of the US economy. The initial claims for state unemployment benefits fell by 24 000 to seasonally adjusted 334 000. The fall was much deeper than analysts had predicted and appeared to back the case for FED winding down the bond buying during 2013. The dollar extended gains against the yen, a sign that investors are betting on tighter monetary policy in the future. Overnight the Euro has gained ground against USD trading at 1.3137. USD/JPY trades at 100,10. In another development the international rating agency Moody’s has raised the outlook on US economy from negative to stable and affirmed the country’s triple-A- rating. Moody’s is citing steady growth despite the reduced government spending. The US budget outlook has improved in recent months, alleviating some of the pressure on policymakers for further budget cuts and more fiscal compromises. In May the Congressional Budget office stated that the deficit is shrinking faster than since 2008. Better than expected earnings took Dow Jones and S&P 500 to new record highs yesterday. Morgan Stanley jumped 4,4 % and posted a 42 % increase in quarterly profit. 76 % of the financials reporting earnings have surpassed estimates. Health and health insurance stocks beat expectations while Microsoft failed to deliver. Dow Jones climbed to 15 589. S&P’s new record is 1693. The Japanese Nikkei which reached a two-month high earlier in the week, slid 1.1 % on profit taking and fear that nationalistic policies will be given priority at the expense of structural reform.

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