Read the highlights of this week’s commentary from Helios:
- July’s ISM Services PMI exceeded consensus estimates and remained above contractionary territory, providing the first piece of positive economic news since the July jobs report raised fears of a recession. The services sector was bolstered by gains in employment, orders, and business activity. Notably, the employment component expanded for the first time this year and reached its highest rate since September, providing reassurance amid concerns over declines in the labor market.
- While initial jobless claims saw their largest decline in nearly a year for the week ending August 3, continuing claims have been rising since mid-April, as evidenced by the increase for the week ending July 27. Additionally, with the recipiency rate dropping to 25% in July from 31% earlier in the year, only a quarter of unemployed workers are applying for benefits, diminishing the relevance of initial claims as an indicator of unemployment rate changes.
- The VIX saw its largest intraday jump ever on Monday, increasing by 42 points to over 65. Derivatives analysts attributed the surge to a lack of liquidity and short covering, suggesting the spike might overstate actual market fears, but cautioned against interpreting it as an all-clear signal for investors.
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