- Initial unemployment claims fell to 684,000 for the week ended March 20, the lowest level since March 2020
- Nearly 12% of global trade passes through the Suez Canal
- The Invesco KBW Bank ETF has advanced nearly 25% year-to-date
Top Three Market Headlines
Jobless Claims Drop to Lowest Level of the Pandemic: Last week’s jobless claims report indicated that initial unemployment claims in the U.S., a proxy for layoffs, fell to 684,000 for the week ended March 20. This was down from 781,000 for the prior week and was the lowest level since March of last year when pandemic-induced lockdowns drove millions of layoffs across the United States. The downtrend in claims reflects the labor market’s ongoing improvement as fiscal stimulus, vaccinations, and easing business restrictions all contribute to the economy’s recovery.
Suez Canal Trade at a Standstill: A 1,300-foot shipping container vessel has become lodged in the middle of the Suez Canal and is disrupting global supply chains for everything from oil to grains to cars. The Suez Canal is one of the busiest trade routes in the world, with nearly 12% of total global trade moving through its ports. The estimated cost of the canal blockage is upwards of $400 million an hour, and dislodging the massive ship could take as long as a week. Suppliers anticipate the delay will increase shipping costs, adding to inflationary pressure on supply chains. In addition to halting roughly $9 billion of trade a day that passes through the canal, the dilemma is exacerbating a global shortage of shipping containers.
Bank Restrictions Lifted: The Federal Reserve said last week that it plans to lift temporary restrictions on banks’ ability to pay dividends and buy back stock. The restrictions, imposed last year as a way to maintain banks’ strength amid economic shutdowns, will be lifted after June 30 of this year for institutions that maintain proper capital levels as evaluated through stress tests performed by the Fed. The Fed’s decision added fuel to the strong rally in bank shares this year that has been spurred by the steepening of the yield curve: the Invesco KBW Bank ETF jumped nearly 5% in the ensuing days after the Fed’s announcement and has now gained approximately 25% year-to-date.