The Day Ahead: Jobless Claims, Bernanke, and Week's Last Treasury Auction

A general reversal of yesterday's "risk-off" trade is underway as events from the overnight sessions serve to moderate some of the panic that fueled yesterday's bond market rally and equities sell-off.  Even before European and Asian markets had a chance to digest Thursday morning's data and events, 10yr Treasuries had already retreated back over th 2% level that served as a supportive ceiling yesterday. 

Later in the session and despite plenty of ongoing negative headlines, nocturnal markets experienced a bit of a correction to yesterday's bond-bullish momentum, led by news of aggressive buying of Italian bonds by the ECB.  That brough yield levels back below 7% and spreads to German benchmarks back slightly from the brink of oblivion.

10yr US Treasuries made it just over 2.05 around 5am but bounced back lower along with S&P futures and the Euro.  Recent news that Greece has decided on a new Prime Minister--the ex-ECB President Papademos--brought markets back to those levels although 10yr yields have yet to break any higher than 2.05.  Here's a quick check of current levels as well as the effects of "the roll" seen in the Fannie 3.5 MBS Chart, courtesy of MBS Live!

Key Events Today:

ECONOMIC DATA

* 08:30 Import Prices (Oct) are seen rising +0.1% month over month versus a +0.3% month

* 08:30 Initial Claims for the week ending November 5th are seen at 400k even versus 397k last week

* 08:30 Continuing Claims are seen hitting mkt 3.680 mln, versus 3.683 mln previously

* 08:30 International Trade for september is seen down-$46.0 bln versus -$45.6 bln previously

* 14:00 Treasury Budget for October is seen down -$105.0 bln versus -$140.4 bln previously

FED SPEAKERS

* 09:00 Atlanta's Lockhart (non-voter) on small business lending; 

   Washington DC

* 10:15 Fed buying $1.5 - $2 bln in the 10yr range from 1015-1100

* 10:40 Chicago's Evans (dove) and ECB's Praet to speak before Chicago Fed

   Conference

* 11:45 FRB Chairman Bernanke at town hall meeting with soldiers

AUCTIONS

* 13:00 Treasury auctions $16 bln 30-year bonds