Initial jobless claims spiked last week:
As Calculated Risk notes, this could reflect the impact of the sequester. We might also be repeating the pattern of the last two years in which claims decline and then disappoint by plateauing for six months. If that is the case, then we should expect to see less improvement in nonfarm payrolls in the months ahead. If so, San Francisco Federal Reserve President would probably need to push back his expectation that large scale asset purchases are tapered off beginning this summer. Note too that 10-year Treasury rates slipped another three basis points this morning to 1.78 percent. Bond markets do not seem to be signaling that the economy is accelerating at a pace sufficient to justify the Fed taking their foot off the gas this summer.