March 15th, 2011 7:44 PM by Lehel S.
Treasuries and mortgage markets doing better this morning after a nice rally yesterday. At 8:30 weekly unemployment filings were generally expected to be up 7K, we were looking for 14K; as released claims increased 26K back to 397K. Continuing claims were lower at 3.771 mil frm 3.791 mil last week, the lowest continuing claims since Oct 2008. The 4 wk average smoothing the week by week volatility increased 8K to 392,250.
Also at 8:30 the Jan international trade deficit expected at $41.5B was higher at $46.34B.Imports jumped 5.2%, the most since March 1993, while exports grew 2.7%. Exports increased to $167.7B, boosted by record shipments of industrial supplies and more deliveries of motor vehicles and food. Imports climbed to $214.1B from $203.6B in the prior month. Purchases of capital goods rose to a record $41.7B in January, while auto imports were the highest since February 2008. The January trade figures showed the U.S. imported 290.7 million barrels of crude oil, the most since August. The value of oil imports increased to $24.5 billion from $22.5 billion. The average price per barrel of imported crude reached $84.34, the highest since October 2008.
Weekly claims up more than expected put a very slight bid in the bond market; the 10 yr note at 9:15 up 3/32 while mortgage prices were trading up 4/32 (.12 bp) frm yesterday's strong close. The stock indexes were weak and at 9:30 the DJIA and the other two key indexes opened soft. Crude oil trading lower this morning as is gold.
More unrest in Egypt yesterday, Christians fighting Muslims over a Christian man in love with a Muslim woman; 13 people were killed in the fight. In Libya Qaddafi forces re-took a city held by the opposition. None of it has impacted oil prices with crude trading down $1.10 at 9:30.
The Bank of England left its base rate unchanged in their meeting. The British pound took a hit. The Brits are facing increasing inflation, and even with the ECB moving close to increasing rates the BofE chose to leave rates unchanged sending the London stock market lower along with all of Europe's stock markets.
The DJIA opened down 160 points at 9:30 and sent US bond and mortgage prices higher. The 10 yr note is almost at its past resistance level, trading at 3.43% at 9:30; 3.40% has halted all attempts to move lower.
At 1:00 Treasury will complete its borrowing for the week with $13B of 30 yr bonds in a re-open of the 30 yr bond issued last month. Yesterday's 10 yr auction was very strong with bidding at 3 basis points lower than where the 10 was actually trading prior to the auction. Today's 30 yr will also likely see strong demand, the amount is rather small.
At 2:00 Treasury will report that the Feb budget deficit for the month totaled an additional $196B; meanwhile in Washington Congress and the Administration haven't done squat in their debates over spending cuts. Maybe Congress is listening to Michael Moore who is running around espousing the US isn't broke and we have all the money we need. Apparently Mr. Moore fails to understand spending more money that you have implies the US doesn't have the money and has to borrow it; our deficit is now over $7 trillion.