US Economy Surges in Q4 With Job Market Remaining Robust Despite Tech Layoffs

By: Miguel A. Rodriguez

10:54, 27 January 2023

dolarul american

GDP in the fourth quarter exceeded analyst expectations, and initial jobless claims dropped to 186k, suggesting a strong job market despite tech company layoffs. 

Yesterday's economic data release from the U.S. was mixed, so it did not have a clear and direct impact on the market when it was released. 

On the one hand, preliminary GDP for the fourth quarter was 2.9% higher than the 2.6% average forecast of analysts, and initial jobless claims fell to 186k, indicating that the job market remains tight despite layoff announcements at many of the big tech companies. 

However, the trade balance showed an increase in the deficit to -90.27 B, indicating the weakness of exports, and in the GDP figures, the price component data decreased, which may be an indicator that the inflation figure, personal consumption spending, to be released today, will be lower. 

The Federal Reserve prefers this data to measure inflation, and a figure lower than expected would be positively received by the markets. 

In fact, market interest rates, or treasury bond yields, remained at their lowest level due to low GDP price component data; the 10-year bond was trading below 3.50%, despite strong headline GDP data. Normally, a higher-than-expected GDP figure would have resulted in a rebound in bond yields. 

Related: How to trade and invest in Bonds 

Wall Street indices enjoyed a good day in the market, with the Nasdaq seeing particularly strong gains due to Tesla's impressive 8% rise in share prices. Last night, Tesla released its fourth-quarter results, reporting higher-than-expected revenue and raising its sales forecasts. 

Yesterday's bullish momentum caused the Tech100 to break the bearish trend line, placing it in a favorable position, technically speaking, and anticipating better performance in the near future. 

In the foreign exchange market, the day was characterized by a modest technical correction, with the US dollar rising slightly despite downward pressure on market interest rates. The dollar index rose by approximately 0.40%. 

Related: EurUsd analysis and price predictions 

Sources: Bloomberg, Reuters 

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This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.The research provided does not constitute the views of KW Investments Ltd nor is it an invitation to invest with KW Investments Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.The research analyst in not employed by KW Investments Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation, or particular financial needs before making a commitment to invest. The laws of the Republic of Seychelles shall govern any claim relating to or arising from the contents of the information/ research provided.