At 830am, weekly jobless claims printed at 421k vs 425k median estimates. Many of the report's metrics showed improvements, but despite a few "best levels in 2 years," the numbers were largely as expected, thus it encited a minimal amount of panic in bond market this morning.
Reuters Quick Recap...
RTRS-US JOBLESS CLAIMS FELL TO 421,000 DEC 4 WEEK (CONSENSUS 425,000) FROM 438,000 PRIOR WEEK (PREVIOUS 436,000)
RTRS-US JOBLESS CLAIMS 4-WK AVG FELL TO 427,500 DEC 4 WEEK FROM 431,500 PRIOR WEEK (PREVIOUS 431,000)
RTRS-US CONTINUED CLAIMS FELL TO 4.086 MLN (CON. 4.25 MLN) NOV 27 WEEK FROM 4.277 MLN PRIOR WEEK (PREV 4.27 MLN)
RTRS-US INSURED UNEMPLOYMENT RATE FELL TO 3.2 PCT NOV 27 WEEK FROM 3.4 PCT PRIOR WEEK (PREV 3.4 PCT)
RTRS-US INSURED UNEMPL0YMENT RATE LOWEST SINCE NOV 22, 2008 WEEK (3.1 PCT)
RTRS-US CONTINUED CLAIMS LOWEST SINCE WEEK ENDED NOV 15, 2008 (4.058 MLN)
RTRS-TABLE-U.S. jobless claims fell in latest week
Though stocks have opened higher, ostensibly on this news, bonds are staying stable after healthy gains this morning which follow the sharp recovery gains after yesterday's auction (which followed a 10-times-sharper sell-off). Fannie 4.0's have added 11 ticks on the morning and are trading in the high 99's for the past hour. They had been as low as the high 98's yesterday.
In the big picture, this still leaves 4.0's under the long term trend seen in the chart below.
Treasuries are having a similar morning having rallied since the open and moving sideways since about 9am. We're not done battling 3.24% yet but we're off yesterday's yield highs. 3.17% is our rally target. We'd expect to see the market get defensive there though....
Just like MBS, the 10yr is also still on the bearish side of the long term trend that broke yesterday (notice the 12/7 test and the 12/8 confirmation bounce in the chart above). Here's the long term chart again that shows how the line above experienced the last few years.
Sorry to be a bit of a bond bear here, but my inclination today is to respect the red line, reassessing after the 30yr auction as necessary. In other words, wouldn't be unreasonable to expect at least some resistance from these technicals.