US continuing jobless claims totalled 1.794 million for the week ending 27 March. This was below the forecast of 1.84 million.
The reported level was 46,000 lower than expected. The figures refer to people who remained on unemployment benefits.
Labor Market Still Tight
The continuing jobless claims data from late March, showing fewer people on unemployment than forecast, points to a labor market that is still remarkably tight. This strength suggests the Federal Reserve has little reason to rush into cutting interest rates. A robust job market can fuel wage growth, keeping inflationary pressures alive and well.
We believe this employment picture gives policymakers cover to hold rates higher for much longer than the market currently anticipates. We remember how the market got ahead of itself in mid-2025, pricing in rate cuts that the Fed was hesitant to deliver because of similar data strength. The recent March CPI report, which showed inflation proving sticky at 3.1%, only reinforces this cautious view.
Consequently, we are positioning for interest rates to remain elevated through the summer. One way to express this is by buying put options on SOFR futures, which would profit if the market starts to price out a July rate cut. The 2-year Treasury yield climbing back above 4.75% after the data release shows this sentiment is already building.
This environment is also a headwind for equities, so we are looking to add downside protection. We see value in buying put options on the Nasdaq-100 index, as growth-oriented technology stocks are particularly sensitive to higher borrowing costs. With the VIX volatility index recently ticking up above 16, hedging has become more attractive.
The U.S. dollar should remain well-supported if the Fed stays on hold while other central banks consider easing. The Dollar Index (DXY) already pushed past the 105.50 mark, reflecting this divergence. We are considering call options on the USD against the Japanese Yen, betting that this policy difference will continue to favor the dollar.
