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In a note to clients, UBS economists led by Thomas Berner previewed some upcoming economic data releases and provided numbers they thought would give the Fed the impetus for to unleash more monetary easing. Specifically, QE3.Initial jobless claims are released at 8:30 a.m. ET. UBS writes that if the number comes in below 400,000, the case will be stronger for no QE3. However, if we see a number above 400,000 and trending higher, that would suggest a need for QE3.
Initial jobless claims may be one of the more important swing indicators at this point, as it’s the only one left in relatively good territory. UBS:
With the exception of initial jobless claims, all key growth and inflation variables have either neutral or affirmative signals for QE3. This is a stark departure from our last update on 20 April, when only two indicators, non-farm payrolls and headline inflation, flashed a neutral signal, whereas all other indicators pointed against QE3.
Consensus estimates are coming in at 375,000. Last reading came in at 377,000.