July 29th, 2010 1:32 PM by Lehel S.
Weekly jobless claims is the only data point today. New unemployment claims totaled 457K -11K from a revised 468K last week, originally 464K. Unemployment claims are solidly at the 450K new unemployment filings each week. Continuing claims increased to 4.565 mil from 4.484 mil. Immediately the spinning started making every feeble argument that claims are doing better because they are not increasing; amazing! The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs. Those who’ve used up traditional benefits and are now collecting emergency and extended payments decreased by about 269,000 to 3.66 million in the week ended July 10. President Obama on July 22 signed into law a measure restoring unemployment benefits that were cut off. The bill provides retroactive aid to those whose checks were cut off when benefits expired June 2, while extending through November a program offering up to 99 weeks of assistance. Almost two years of assistance, 3.66 mil on extended benefits; these are not statistics that support the view of an expanding economy.
Prior to the 8:30 claims report the rate markets were unchanged, by 9:00 however the 10 yr note was off 6/32 at 3.01% with mortgage prices unchanged. Stock indexes at 9:00 were better; the DJIA +62. It is becoming very predictable that every other day the markets rally and the next day decline with no real changes. The bullish view remains solely on earnings, ignoring the high unemployment and the wipe out of consumer wealth as if consumers don't matter anymore. What ever happened to the reality that consumers account for 70% of GDP growth? Clearly markets can paint any picture that suits to justify that the economy is improving.
At 1:00 this afternoon Treasury will conclude its bi-weekly borrowing to fund the short-fall and increase the US budget deficit. $29B of 7 yr notes will be borrowed. Yesterday the 5 yr auction was one of the strongest 5 yr auctions in quite awhile, traders expect the 7 yr today to be well bid also.
The rest of the session today will focus on the stock indexes; better and treasuries weaker, weaker and treasuries better. Looking to tomorrow, there is a lot to digest; the advance Q2 GDP report, expected at +2.5%, Q2 employment cost index (+0.4%), the July Chicago purchasing mgrs index (56.0 frm 59.1) and the U. of Michigan consumer sentiment index (67.0 frm 66.5).