Good Morning. Happy Tax Day. This was my first year being self-employed. Holy miserable Batman. I absolutely cannot stand doing taxes. Thank goodness I have two devoted family members who remove this burden from me!

More importantly, the Washington Capitals tonight begin the second stage of their quest for Lord Stanley's Cup when they open round 1 of the NHL playoffs against the Montreal Canadians. Ovi is ready. This entire city is ready for the Caps to bring home the cup. The phone booth will be rocking tonight and I will be yelling "BACKCHECK" and "GET IT DEEP" at the TV. Seriously, this is a big deal to me.

Jobless Claims data has been released.

Initial Claims for Unemployment Insurance rose by 24,000 to 484,000 in the week ending April 10. This was MUCH WORSE than the consensus forecasts of 440,000. Last week's data was not revised. The 4-week moving average of initial jobless claims was 457,750, an increase of 7,500 from the previous reporting period.

Continued Claims ballooned from 4.566 million to 4.639 million. This was MUCH WORSE than the consensus forecast of 4.540 million.

The amount of Americans utilizing extended unemployment benefits fell by 99,716 to 114,711. However, the number of jobless folks needing emergency unemployment benefits grew from 5,593,484 to 5,855,301. That is an increase of 261,817.

The largest increases in initial claims for the week ending April 3 were in Pennsylvania (+5,314), New Jersey (+3,582), Illinois (+2,250), Ohio (+1,769), and Washington (+1,673), while the largest decreases were in Texas (-3,138), California (-2,973), Florida (-2,646), North Carolina (-1,839), and Puerto Rico
(-676).

Below is a recap of the data. Notice how much higher jobless claims were last week when you remove seasonal adjustments. Comments from a BLS spokesperson are all over my newsfeed, they say the rise in claims is due to typical volatility around Easter.

Data like this reminds us that 6.5 million Americans, or 44.1% of the unemployed have been without a job for longer than 6 months. MAKES IT EASIER TO UNDERSTAND WHY HAMP CAN ONLY BE SO SUCCESSFUL DOESN'T IT???

Plain and Simple: while jobless claims are considerably lower than the worst levels of 2009,  positive progress appears to have stalled. We would like to see weekly claims fall below 400,000

At the same time, the Empire State Manufacturing Survey was released by the Federal Reserve Bank of New York.

 From the FRBNY:

"The Empire State Manufacturing Survey indicates that conditions for New York State manufacturers improved at a rapid pace in April. The general business conditions index rose 9 points, to 31.9. The new orders and shipments indexes advanced as well, and the inventories index climbed to a record high. The prices paid index moved up 12 points to 41.8, its highest level in considerably more than a year, while the prices received index held fairly steady at a level just above zero. Employment indexes rose to high levels, suggesting that employment levels are continuing to improve. Future indexes conveyed an ongoing sense of optimism about the six-month outlook."

Plain and Simple:  Although it is concerning to see the "prices paid" index rising and the "prices received" index falling, because that implies less profits, all I can really say about this release is WOW. The market was expecting the business conditions index to come in at 24. This data destroyed those expectations. What a turnaround in manufacturing. Remember what Bernanke said yesterday though: "U.S. manufacturing output, which is benefiting from stronger export demand as well as the inventory adjustment I noted earlier, rose at an annual rate of 8 percent during the eight months ending in February."

Here is a chart pointing out that turnaround.  

Stock futures don't seem to care too much. I have long thought that stocks would begin to their lose their luster when the S&P hit 1200. Well the S&P broke 1200 yesterday. NOW WHAT?

TSYs in the long end of the yield curve are not doing great. Not terrible, just not great.

The yield curve is bear steepening this AM as the 3.625% coupon bearing 10 year TSY note is -0-06 at 97-27 yielding 3.889%. This is one of my levels of support. If 10s break through I expect a test of 3.92%. If 3.88% support holds, I think 10s move back down to 3.85% and wait for more guidance from related markets and Fed speak. 

Higher benchmark rates are pulling the secondary mortgage market current coupon yield higher as rate sheet influential MBS prices are modestly lower. The FN 4.5 is currently -0-02 at 99-29 yielding 4.518%. The secondary market current coupon is 4.517%. The current coupon yield is 62.7 basis points over the 10 yr TSY note rate and 66.2 basis points over the 10 year interest rate swap.

Rate sheets will be worse this morning...

REPRICES FOR THE BETTER CONSIDERED AROUND 100-07

REPRICES FOR THE WORSE CONSIDERED AROUND 99-25

Considering CPI data confirmed inflation is well contained  and Ben Bernanke continues to provide low rate rhetoric..I have to say I am baffled by the rise in rates.

Actually no I am not...we were nervously expecting it

It's still a trader's world and we're still living in it. 10s tried their darnedest to breakout below 3.80% and head toward the 3.57 to 3.85 range midpoint at 3.71%. 10s FAILED to gain momentum on several occasions! Even when fundamentals supported the move!

With that in mind, traders appear to be looking to confirm that the market is comfortable with the 10 year note yielding less than 3.85%. While I do think we could see rates rise a bit further before another retest of lower levels occurs, we are hopeful for a move back below 3.85%. There are several Fed speakers on the schedule today, we sure could use more dovish comments from Bernanke's understudies.

Last but not least....

The Obama Administration is finally ready to listen to what we have to say about Housing Finance Reform. HERE is your chance to voice your opinion!