Tough Treasury Auctions Belie Renewed Recession Chatter

US stock prices and bond yields rose today following the release of the latest weekly jobless claims report confirming our view that the labor market is still doing well. The S&P 500 jumped 2.3% to 5,319.31 and the 10-year Treasury yield briefly rose above 4.00%. The recent lift in the bond yield was exacerbated by the second straight day of weak Treasury auctions. Let's discuss:

(1) Unemployment claims. Initial unemployment claims fell 16,000 to 233,000 (sa, including revisions) for the week ended August 3 (chart). We chalked up much of the weakness in the previous claims report, and Friday's monthly jobs report, to weather and seasonal factors.