Prior to 8:30 this morning the 10 yr note was unchanged frm yesterday and MBS prices up 2 bp frm yesterday. 8:30 uncovered three reports, two friendly to the bond market, one not so friendly. March personal income was expected to have increased 0.2% as reported income was unchanged. March personal spending was thought to be up 0.5%, as reported up 0.4%. Q1 employment cost index was a little stronger than thought, up 0.7% against +0.6%. The not-so-good for the bond market; weekly jobless claims were expected down 7K to 288K, as re[ported -34K to 262K. The reaction sent the 10 yr to 2.07% +3 bp and 30 yr MBS price down 14 bps.
Weekly claims the lowest in 15 years (April 15th 2000). The level of firings is consistent the Federal Reserve’s view of sustained progress in the job market. The number of people continuing to receive jobless benefits dropped by 74,000 to 2.25 million in the week ended April 18, the lowest level since December 2000. The four-week average of claims, a less-volatile measure than the weekly figure, declined to 283,750 from 285,000 in the prior week. March personal spending increased 0.4%; when adjusted for inflation, consumer spending rose 0.3% in March. Spending on services increased 0.2% in March from the prior month. Spending on goods jumped 1% after three consecutive monthly declines, Personal income, which measures money received from various sources including wages and government assistance programs, was basically flat in March from the prior month, the weakest reading since December 2013. At 9:30 the DJIA opened -39, NASDAQ -20, S&P -5. 10 yr note 2.08% +4 bp; 30 yr MBS price -28 bps frm yesterday’s close and -13 bps frm 9:30 yesterday. At 9:45 April Chicago purchasing mgrs. index, expected 50.0 frm 46.3 in March. The index increased to 52.3. One more better data point to add to today’s list of mixed news. German interest rates continue to increase; at 0.35%, three weeks ago the rate at 0.07%. Dollar decline against the euro and increasing European rates married to the data today and the US outlook has changed the near term outlook for the interest rate markets. The increase in interest rates across Europe, the softening dollar against the euro currency are some of the drivers that are now driving interest rates higher. The Greek tragedy continues with nothing new but more talking. The data this morning on declining weekly claims fortifies the view the Fed will move in Sept, but it remains a moving target. PRICES @ 10:00 AM
10 yr note: -17/32 (56 bp) 2.10% +6 bp
5 yr note: -12/32 (37 bp) 1.50% +7 bp
2 Yr note: -4/32 (12 bp) 0.62% +4 bp
30 yr bond: -32/32 (100 bp) 2.81% +5 bp
Libor Rates: 1 mo 0.184%; 3 mo 0.278%; 6 mo 0.406%; 1 yr 0.696%
30 yr FNMA 3.0 May: @9:30 101.52 -28 bp (-13 bp frm 9:30 yesterday)
15 yr FNMA 3.0 May: @9:30 104.43 -25 bp (-12 bp frm 9:30 yesterday)
30 yr GNMA 3.0 May: @9:30 102.38 -27 bp (-11 bp frm 9:30 yesterday)
Dollar/Yen: 119.58 +0.56 yen
Dollar/Euro: $1.1128 unch
Gold: $1186.80 -$23.20
Crude Oil: $58.71 +$0.13
DJIA: 17,955.11 -80.42
NASDAQ: 4994.36 -29.28
S&P 500: 2096.36 -10.49
Weekly claims the lowest in 15 years (April 15th 2000). The level of firings is consistent the Federal Reserve’s view of sustained progress in the job market. The number of people continuing to receive jobless benefits dropped by 74,000 to 2.25 million in the week ended April 18, the lowest level since December 2000. The four-week average of claims, a less-volatile measure than the weekly figure, declined to 283,750 from 285,000 in the prior week. March personal spending increased 0.4%; when adjusted for inflation, consumer spending rose 0.3% in March. Spending on services increased 0.2% in March from the prior month. Spending on goods jumped 1% after three consecutive monthly declines, Personal income, which measures money received from various sources including wages and government assistance programs, was basically flat in March from the prior month, the weakest reading since December 2013. At 9:30 the DJIA opened -39, NASDAQ -20, S&P -5. 10 yr note 2.08% +4 bp; 30 yr MBS price -28 bps frm yesterday’s close and -13 bps frm 9:30 yesterday. At 9:45 April Chicago purchasing mgrs. index, expected 50.0 frm 46.3 in March. The index increased to 52.3. One more better data point to add to today’s list of mixed news. German interest rates continue to increase; at 0.35%, three weeks ago the rate at 0.07%. Dollar decline against the euro and increasing European rates married to the data today and the US outlook has changed the near term outlook for the interest rate markets. The increase in interest rates across Europe, the softening dollar against the euro currency are some of the drivers that are now driving interest rates higher. The Greek tragedy continues with nothing new but more talking. The data this morning on declining weekly claims fortifies the view the Fed will move in Sept, but it remains a moving target. PRICES @ 10:00 AM
10 yr note: -17/32 (56 bp) 2.10% +6 bp
5 yr note: -12/32 (37 bp) 1.50% +7 bp
2 Yr note: -4/32 (12 bp) 0.62% +4 bp
30 yr bond: -32/32 (100 bp) 2.81% +5 bp
Libor Rates: 1 mo 0.184%; 3 mo 0.278%; 6 mo 0.406%; 1 yr 0.696%
30 yr FNMA 3.0 May: @9:30 101.52 -28 bp (-13 bp frm 9:30 yesterday)
15 yr FNMA 3.0 May: @9:30 104.43 -25 bp (-12 bp frm 9:30 yesterday)
30 yr GNMA 3.0 May: @9:30 102.38 -27 bp (-11 bp frm 9:30 yesterday)
Dollar/Yen: 119.58 +0.56 yen
Dollar/Euro: $1.1128 unch
Gold: $1186.80 -$23.20
Crude Oil: $58.71 +$0.13
DJIA: 17,955.11 -80.42
NASDAQ: 4994.36 -29.28
S&P 500: 2096.36 -10.49
