San Diego Home Mortgage Blog

We will begin the session continuing to float; however, after the strong rally in the past few days the bellwether 10 yr note and MBSs both have found some resistance at key MAs.

Weekly jobless claims at 8:30 were down 1K to 530K, not as much of a decline as expected (-5K). Continuing claims did decline 178K to 5.797 mil frm 5.94 mil last week; markets saw that as a significant improvement in the jobs outlook but that is way off base thinking. Declining continuing claims would normally be a positive for the employment outlook if this were a normal recession. Not the case; continuing claims are likely declining as unemployment benefits are ending for many that lost jobs six months ago with no extension from the Obama administration. When unemployment benefits are extended (we expect they will soon) continuing claims will stabilize and begin to increase. The take away from the claims data today, as is the case every week, 500K+ a week are losing jobs; been going on for all of this year. Lipstick on the pig isn't enough to take it to the prom. Job losses at 2 mil a month isn't a building block for economic recovery no matter how it is spun.

Also at 8:30 the first look at Q3 GDP; better than expected, +3.5% frm -0.7% in Q2. Market consensus was for +3.2%. It is history however, we are well into Q4. Nevertheless the better growth triggered buying in the stock index futures and drove the stock market to a better open at 9:30. Along with the decline in continuing claims and after the 330 decline in the DJIA in the past four sessions investors look to be "bargain" hunting to start the session. Equities are also getting help from the dollar, weaker this morning. If not for the dollar plunge the equity market would have very little support; a high percentage of the recent rally in stocks is coming from foreign investors taking advantage of the falling buck.

Geithner is beginning testimony on financial reform; likely nothing substantial will come of it; most know what the path is----reign in the banks and Wall Street from their foolishness that almost sent the globe into a depression greater than that big one way back then. Geithner and Barney Frank together again.

At 1:00 Treasury will complete its borrowing for the week with $31B 7 yr note. Likely to be OK but also likely not as well bid as the 2 and 5 yr notes.

The White House has bogused the number of jobs created with the $787B stimulus which for the most part so far has been another waste coming out of Washington. The Pew Institute has raked over the numbers and found that new job creation has been way less than what the administration had touted; so much so that the White House is also back-peddling on the "good news". Republican, Democrat, conservative or liberal; difficult to trust much of what comes out of the Washington cesspool.

Congratulations to the Internet! Today is the 40th anniversary of Al Gore's invention of it. Also the 80th anniversary of the Big Depression.

PRICES @ 10:00 AM

10 yr note: 101.09 -14/32 3.47% +6 BP

5 yr note: 99.25 -13/32 2.42% +8 BP

2 Yr note: 100.01 -2/32 0.98% +3 BP

30 yr bond: 103.09 -22/32 4.30% +4 BP

Libor Rates: 1 mo 0.243%; 3 mo 0.280%; 6 mo 0.564%; 1 mo 1.198%

30 yr FNMA 4.5 Nov: 101.02 -3/32 (+14/32 (.43 bp) frm 9:30 yesterday)

15 yr FNMA 4.0 Nov: 101.21 -1/32 (+10/32 (.31 bp) frm 9:30 yesterday)

30 yr GNMA 4.5 Nov: 101.07 -3/32 (+12/32 (.37 bp) frm 9:30 yesterday)

15 yr GNMA 4.0 Nov: 102.12 unch (+10/32 (.31 bp) frm 9:30 yesterday)

Dollar/Yen: 91.20 +0.57 yen

Dollar/Euro: $1.4781 +$0.0065 (dollar weaker)

Gold Dec: $1039.80 +$9.30

Crude Oil Dec: $78.56 +$1.10

Goldman-Sachs

Commodity Index: 504.63 +6.34

DJIA: 9851.94 +89.10

NASDAQ: 2083.16 +23.59

S&P 500: 1054.62 +11.99