Good Morning on this last day of the decade.

10 years sure did go by fast didnt it? Remember the whole y2k computer crisis? People thought the world was going to end when 1999 rolled over to 2000. We dodged a bullet on that one huh? (note sarcasm)

Just out of curiosity...how are you planning on referring to 2010?

Two thousand and ten? Twenty-Ten? O-ten? Ten?

I'm leaning towards "Twenty-Ten"...it sounds like something George Jetson might say.

Jobless Claims data has been released...it was not bond market friendly.

Initial Jobless Claims were WAY better than expected, falling to 432,000 from 454,000 last week. Consensus forecasts were calling for a read of 460,000 new claims. This is the lowest number of initial jobless claims since July 19, 2008.

Continuing Claims also beat expectations. The market anticipated 5.11 million continuing claims, it got 4.98 million...the lowest number since February 7, 2009. 

Here is a table summarizing the data:

The first thought that comes to mind after reading through this report: I am hungry.

The second thought: Non-Farm Payrolls data is released next Friday. While its hard to make much of a forward looking prognosis based on price action this week...one has to assume the market will be looking for continued positivity from the Employment Situation Report (NFP)...which would be bad for mortgage rates. (Not saying rates would go higher, more so they wouldnt go lower. Strong econ data confirms recent rates selling).

The third thought: Jobless Claims are very volatile at this time of year....so the drop in new claims may not imply anything at all.

The knee jerk reaction in the bond market: SELL NOW ASK QUESTIONS LATER!

"Rate sheet influential" benchmarks are taking a beating. The 3.375 semi-annual paying coupon bearing 10 year TSY note is -0-18 at 96-00 yielding 3.864%.

Mortgages aren't  losing as much into the down trade...but RED is still smeared across the MBS scorecard this AM.

The FN 4.0 is -0-07 at 96-17 yielding 4.326% and the FN 4.5 is -0-05 at 99-24 yielding 4.537%. The secondary market current coupon is 4.535%. MBS yields are outperforming TSYs and swaps to start the session.

So rates sold off following the release of jobless claims (which I need to dig deeper into). While many will take this data as an indication of good things to come in next week's labor market report, we cannot confirm or deny any market bias based on the knee jerk moves in bond prices. Again I must call attention to VERY LIGHT TRADING VOLUMES during this selloff. The lack of liquidity in the marketplace creates extra CHOPATILITY and distorts price movements.

Unfortunately in the here and now...SELL NOW ASK QUESTIONS LATER is going to have a  foul effect on mortgage rates this morning.

The bond market closed last week...I mean it closes at 2pm today. I will be in and out of the office because I need to go get an anniversary present for Kaycie (two whole years).