The latest US initial jobless claims have reached 263,000, exceeding the estimate of 235,000. The previous week was slightly revised from 237,000 to 236,000. Continuing claims are now at 1.939 million, which is below the expected 1.951 million. The previous week’s figure was updated to 1.939 million from 1.940 million. The four-week moving average for initial jobless claims has risen to 240,500, up from 230,750.

Initial Jobless Claims Data

For continuing claims, the four-week moving average is at 1,945,750, down 750 from the previous average of 1,946,500. This initial jobless claims number is the highest since October 2021. The US stock market has dipped, with the S&P and NASDAQ gaining 6 and 51 points, respectively, after the release of CPI and claims data. However, today’s gains may still be significant. The US dollar has weakened as yields have dropped. The 2-year yield fell by 4.5 basis points to 3.489%, while the 10-year yield decreased by 2.5 basis points to 4.007%. In currency markets, the EURUSD climbed above its 200-hour moving average of 1.1693, reaching the 100-hour moving average at 1.17211. An ECB press conference with Lagarde is coming soon. Today’s initial jobless claims data deserve attention, coming in at 245,000 against a projected 220,000. The 4-week moving average has now risen to 232,000, marking its highest level this year. Meanwhile, recent reports show core inflation stuck at 2.8%, complicating the Federal Reserve’s plans. This situation is reminiscent of the fall of 2022, when a surprising spike in claims to 263,000—also the highest since late 2021—caught the market off guard. This led to increased market volatility, as traders began to doubt the strength of the labor market. The market is now adjusting risk, with the VIX rising from 14 to 16 in the past hour.

Market Volatility and Investment Strategies

In this context, derivative traders should think about buying protection against a market downturn. With the S&P 500 near its record highs, buying out-of-the-money put options on the SPX or SPY for October could serve as a cost-effective hedge. This approach would profit from either a slow decline or a rapid drop due to fears of an economic slowdown. Today’s drop in the 2-year Treasury yield to 3.85% suggests that the bond market is starting to anticipate a more dovish Fed. Keep an eye on options in interest rate futures, such as calls on the 2-Year Note futures (ZT). These positions could be advantageous if the market begins to expect the Fed to pause its rate hikes or consider cuts sooner than expected. In this environment, volatility is becoming an asset worth trading. Consider taking long positions on the VIX through call options or VIX-linked ETFs for the coming weeks. Current market complacency has kept volatility relatively affordable, but as seen before, surprises in jobless claims can be early signs of larger market shifts. Create your live VT Markets account and start trading now.

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