QI TAKEAWAY — We’re distrustful of yesterday’s rally given the real economy continues to weaken as gauged by the labor market. The collapse in the MOVE index is beyond premature in our view, even on the heels of the first major flight to quality trade we’ve seen in what feels like forever. Credit risk is not expunged, and one CPI print won’t alter that reality.
- Despite markets rallying on a headline CPI that came in below expectations, nearly 60% of sub-categories still had a three-month run rate above their YoY change; meanwhile, job cuts continue to tick up, per DailyJobCuts.com, with November already tripling October’s total
- Indiana, the most manufacturing-intensive state in terms of share of gross state product, has the highest rate of initial claims growth, up 41.9% YoY; meanwhile, in Texas, which ranks first in exports intensity, claims are still down 6.9% YoY but are on a clear upward trajectory
- Manufacturing will lag this cycle due to supply chain issues, and in Louisiana, the leader in nondurables, initial claims have troughed; meanwhile, Nevada, the most Travel-intensive state, ranks 11th in initial claims growth, a sign services spending will not take over for goods