Daily Newsletter 7/17/25

U.S. initial jobless claims declined by 7,000 to 221,000 for the week ending July 12, coming in below expectations of 234,000. The four-week moving average of initial claims also fell by 6,000 to 230,000.

Continuing claims increased by 2,000 to 1,956,000. The four-week moving average of continuing claims rose by 5,000 to 1,958,000, marking the highest level since November 20, 2021.

The latest figures have further complicated the Federal Reserve's policy dilemma. In theory, a strong labor market provides justification for maintaining higher interest rates, as robust employment can sustain increased borrowing costs without precipitating an economic downturn. However, this is only part of the issue. Given the current political landscape, the Federal Reserve is facing heightened scrutiny and mounting pressure that could usher in significant changes to the way it operates, making its path forward particularly challenging.

How the markets will respond to a significant overhaul in Federal Reserve structure and policy remains difficult to predict. However, given that markets have thus far shown resilience in the face of major changes, we will continue to closely monitor developments as they unfold.

One might now question whether the dual mandate has been, or continues to be, an effective policy framework.