Market Snapshot 12/22/2011

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Weekly jobless claims were expected to have increased by 14K based on surveys of economists and analysts; claims as reported fell 4K to 364K, the lowest weekly filings since April 2008. Continuing claims fell 79K to 3.55 mil; continuing claims figure does not include the number of Americans receiving extended benefits under federal programs. Those who’ve used up their traditional benefits and are now collecting emergency and extended payments decreased by about 136,300 to 3.51 million in the week ended Dec. 3. Three weeks now where claims have declined is evidence firings are declining and in turn should foreshadow an increase in employment and possible consumer spending.

Also at 8:30 the final read on Q3 GDP, expected unchanged from the prelim at +2.0%, growth was revised lower to +1.8%. Stock indexes were strong prior to 8:30; claims added some support but the GDP weighed on the other side. Nevertheless the indexes managed to hold gains but less than before the data.

At 9:30 the DJIA opened quietly at +20, the 10 yr note +9/32 at 1.94% -2 bp and mortgage prices +4/32 (.09 bp).  

More data at 9:55; the U. of Michigan consumer sentiment index, expected at 68.0 frm 67.7, the index jumped to 69.9; current conditions index at 79.6 frm 77.9 and the 12 month outlook index at 70.0 frm 64.0. Much stronger consumer sentiment added a few points to the DJIA but not much. The reaction in the bond market also subdued.

The final data today at 10:00, Nov leading economic indicators expected up 0.3% increased +0.5%.

Europe still gets most of the attention, always something to talk about given the cliff the region is teetering on. Not much today of market-driving info. The remainder of the day will be on thinner volume with the equity market taking the lead. So far this morning the stock market is struggling with the weaker GDP report for the 3rd quarter and the better weekly claims. The bond market focusing on the soft GDP but will lose gains if equity markets take hold later today; conversely if indexes succumb bonds will do better. That said, we do not expect much today with Christmas holyday's beginning tomorrow.

Interesting reactions today in the stock and bond markets; the data reported for the most part was better than thought, except toe Q3 GDP. After all the data the two markets are essentially unchanged from levels prior to the 8:30 reports. Still a bullish bias for the rate markets but if the holidays were not a factor the bond market would likely be soft. With the mess in Europe investors are not likely to lighten up on safety moves