The Day Ahead: Jobless Claims, Treasury Auction

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Treasuries are firmer in early trading Thursday while U.S. equity futures are mixed after three straight sessions of gains this week.

The two-year Treasury yield is steady at 0.23%, but the 10-year and 30-year yields are each firmer by one basis point at 2.28% and 3.63%. The minor gains follow a large upswing in rates on Wednesday, led by the 10-year yield backing up 15 basis points. The Fannie Mae 4.0 MBS coupon, now the main conduit for new loan origination hedging, is UNCH at 103-16.

The trading session in Asia was robust as shares grew 2.91% in China, 1.54% in Japan, and 1.47% in Hong Kong. The ongoing session in Europe is less positive but still upbeat, with the FTSE 100 up 0.17% the CAC-40 up 0.96%. One hour ahead of the opening bell, S&P 500 futures are 2.75 points higher at 1,174.75 andDow futures are 34 points higher at 11,298.

Shares of Apple have tumbled roughly 5% since Wednesday evening's announcement that Steve Jobs had stepped down as Apple CEO, he will however stay on as Chairman of the Board.

Light crude oil rose 0.22% overnight to $85.35 per barrel, but gold prices continue to drop fairly rapidly, losing 2.82% overnight to $1,707.80. Gold prices dropped a massive $100/ounce in Wednesday's session.

Key Events Today:

8:30 - Initial Jobless Claims disappointed markets last week by rising 9k to 408k, but the four-week average continued to fall, coming in at 402,500 - the lowest since mid-April. So the report continues to provide optimism that the nonfarm payrolls report for August won't be terrible. This week economists expect to see 400k new claims, with estimates ranging from 390k to 420k. 

"The continued improvement in jobless claims despite downbeat data elsewhere is encouraging and moderately constructive for employment ahead," economists at Citigroup said. "Separately, beneficiaries likely were little changed, keeping the insured rate at 2.9% a third week. The insured rate has been largely constant over the last six months despite the uptick in the national rate."

Treasury Auctions:

 

  • 1:00 - 7-Year Notes