Weekly jobless claims were better
than expected; -10K to a low 311K filings, continuing claims also fell to 2.82
nil from 2.87 mil last week. The four-week average of claims, a less-volatile
measure than the weekly figure, fell to 311,750, the lowest since Sept. 28,
from 327,250 in the prior week. On the March employment report out next Friday,
the current early estimate is for an increase of 190K after increasing 175K in
Feb.
Q4 final GDP was expected at +2.7%
from +2.4% on the preliminary report last month; it was revised better to
+2.6%, according to the Commerce Dept. the increase in GDP was most
due to an increase in spending for health care (ACA).
More strong news from Britain;
retail sales in the country were up 1.7% in Feb from Jan (-2.0%); the increase
in sales was three times higher than analysts were predicting, yr/yr sales were
up 3.7%.
Prior to the 8:30 data this
morning the US stock indexes were trading better,
by 9:00 however the key indexes had reversed and were trading weaker. When does
better economic data generate selling in equity markets? When the strength of
the economic outlook leads to increased fears that interest rates will be
raised sooner rather than later. Janet Yellen made it clear a week ago that the
Fed is now turning its attention to increasing rates rather than the last four
years of supporting stock markets with almost zero interest rates. Today’s
better claims and improving conditions in some of the EU economies took a
little wind out of traders betting on a better stock market today. It is way
too early today to predict how stocks will end the session but another day like
yesterday cannot be ruled out (the DJIA ended down 99 points).
Feb pending home sales reported by
NAR at 10:00 was expected to be down 0.8% from Jan; as reported sales were
down 0.8% to the lowest level since Oct 2011; yr/yr down 10.5% and the 8th
straight decline in pending home sales in a row.
This afternoon at 1:00 Treasury
finishes this week’s borrowing with $29B of 7 yr notes.
Yesterday Treasury sold $35B of 5s with one of the strongest demands in recent
years; expect another well bid auction again today but likely not as strong as
the 5.
Tuesday the March consumer
confidence index was at a six year high. Bloomberg has another measurement
called the Bloomberg Consumer Comfort index; out this morning and the lowest
level of comfort in seven weeks. The index fell for a second week, to minus
31.5 in the period ended March 23 from minus 29. For the first time since early
February, all three components of the gauge, which also includes measures of
the buying climate and personal finances, decreased in the same week. Which one
is the correct one? Or are neither correct?
The 10 yr note is at a very key
level at 2.70%, since late January each time the 10 cracked 2.70% it didn’t
last long before the rate moved back to the 2.77% level. Support for US
interest rates is coming from some safety trades on the continuing Russia/US
threats over economic sanctions and the remote possibility that Russia will
invade Ukraine to grab more territory. Support also coming from the weakening
stock markets. Neither supports have much teeth though; the wider outlook that
the Fed will end monthly buying of MBSs and treasuries and move to begin
increasing short term rates sooner than what had been thought until Yellen’s
comments last week are going to keep interest rates from declining much. The
technicals are still holding essentially neutral readings; although the 10
today is below its 20, 40 and 100 day averages, the current level is at
critical chart resistance.
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