Key Economic Data:
EUR / USD 1.4885 Down 0.0078
USD / JPY 88.656 Down 0.6950
GBP / USD 1.6646 Down 0.0103
OIL 79.00 Down 0.58
Gold 1,138.20 Down 3.00
FNMA 30-YR 4.5%
Previous close 101.688
Opened up 0.06BPs @ 101.750
Key Economic News:
Weekly claims, Philadelphia Fed, mortgage delinquencies, leading indicators, Geithner testimony, and the usual financial stuff…
8:30: Unemployment insurance claims…continuing to drift down? For initial claims, median forecast (of 42): 504k, ranging from 485k to 550k; last 502k. For continuing claims, median forecast (of 16): 5.598 million, ranging from 5.35mm to 5.7mm; last 5.631mm. Initial claims have been trending slowly but clearly downward. However, most forecasters seem reluctant to look for a break below 500,000, at least this week. One possible source of upside risk: government layoffs in Puerto Rico. This week’s figure covers the reference week for the November payroll survey. Continuing claims for regular benefits have been falling more rapidly, though mainly unemployed workers are exhausting eligibility for regular benefits. In this case, today’s number is still a week ahead of the payroll survey.
10:00: Philadelphia Fed business index for Nov…steady growth? Median forecast (of 56): +12.2, ranging from +3.5% to +20; last +11.5. This index has not had the wild swings of its neighbor to the north. Forecasts are centered around a median with relatively little change.
10:00: Mortgage delinquencies and foreclosures for Q3…last 9.24%. This figure reflects the total percentages of loans (not outstanding balances) past due by 30 days or more. It has risen continuously since early 2007 and is likely to go higher. Foreclosure initiations were at 1.47% in the second quarter, having increased sharply after moratoriums as the end of 2008 brought them down to 1.01% from 1.19% a year ago. These too are apt to go up.
10:00: Index of leading indicators for Oct… a smaller increase. Median forecast ( of 58): +0.4%, ranging from flat to +0.9%; last +1.0%. We are reducing our expected increase by 0.1 point on the back of the decline in housing permits reported for October. This would mark the smallest increase since the index turned up in April. The increase comes mainly from labor market (workweek and claims) and financial (stock prices and yield curve) indicators. In addition to housing permits, consumer expectations and supplier deliveries should take away a bit from the advance.
10:00: Treasury Secretary Timothy Geithner testifies about financial reform…to the joint Economic Committee of the US Congress.
16:30: Fed balance sheet data. With the Supplemental Financing Program (SFP) down to tag ends ($15bn) and outstanding balances in liquidity and short-term credit facilities “only” $173bn, we should start to see more visible increases in the size of the Fed’s balance sheet (from $2.1trn) as it continues to book asset purchases with little in the way of offsets.
Advice:
Initial Jobless Claims – No Major News
Bottom Line: Initial claims flat at just over 500,000, while continuing claims for regular benefits continue to decline. Decline in continuing claims is most likely a reflection of exhaustion of eligibility rather than significant new hiring.
Key Numbers:
Initial claims flat at 505,000 vs. median forecast 504,000.
Continuing claims -39,000 to 5.611 million vs. median forecast 5.598 million.
Based on the Initial jobless claims and all the outstanding news, I see uncertainty in the markets again.
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