Synopsis:

Morgan Stanley forecasts a slight decline in US jobless claims and highlights PPI’s role as an input for core PCE inflation.

Key Points:

1. US Initial Jobless Claims:

   • Last week's claims rose by 11K to 219K, but no specific state saw an outsized impact.
   • The four-week moving average sits at 217K, slightly below December’s 223K.
   • Forecast for this week: 215K, indicating continued labor market resilience.

2. US Producer Price Index (PPI) for January:

   • PPI accounts for ~20% of core PCE, making it an important inflation input.
   • Any upside surprise in PPI could raise concerns about persistent inflation, affecting Fed expectations.

Conclusion:

Morgan Stanley expects jobless claims to decline slightly, reinforcing a tight labor market. Meanwhile, PPI will be closely watched for inflation signals, as it feeds into core PCE, a key Fed metric.