|he final day of the year; a world-wide event that everyone enjoys. Markets are so thinly traded that whatever movements we have today are taken with some winking. This is a day that all markets around the world should be closed, but alas, the exchanges need the money. Weekly jobless claims this morning were higher than forecasts at 286K to 290K; claims increased 17K to 298K. It is holiday season so we don’t put any significance to the increased claims. The four-week moving average, a less volatile measure than the weekly figures, increased to 290,750 last week from 290,500.
At 9:30 the DJIA opened +42 after closing down 55 yesterday, the NASDAQ opened +9 and the S&P +3. The 10 at 9:30 unchanged at 2.19%, but earlier the yield started at 2.17% down 3 bps; 30 yr MBS price at 9:30 +3 bp from yesterday’s close and -7 bps from 9:30 yesterday.
At 9:45 the Dec Chicago purchasing mgrs. index was thought to be unchanged from November at 60.8; the index fell to 58.3 the weakest since last July. New orders were weak but employment component did increase slightly.
China’s economy continues to slow; The HSBC PMI, a gauge of nationwide manufacturing activity, fell to a final reading of 49.6 in December from 50 in November, HSBC Holdings PLC said Wednesday. A reading below 50 indicates a contraction in manufacturing activity from the previous month, while a reading above that shows expansion.
At 10:00 Nov pending home sales from NAR were estimated at +0.5%; as reported up 0.8%, yr/yr +4.1%.
The last day of the year didn’t relax oil traders; oil this morning at another new low at $52.72. As long as oil declines other commodities will lean that way; no inflation now or not likely much next year. The Fed and ECB have been trying for a few years to get inflation moving and in Europe to avoid outright deflation. No inflationary fears removes one major hurdle for fixed income investors.
The bond and mortgage markets will close at 2:00 this afternoon; stock markets go all day. We will have closing prices this afternoon at our usual 4:30 time.
We don’t look for any significant movements today in either equities or the interest rate sector; At 10:00 am eastern time Japan rang in the new year; a rolling time frame now until 12:00 am tomorrow in New York.
PRICES @ 10:10 AM
- 10 yr note: +4/32 (12 bp) 2.18% -1 bp
- 5 yr note: +2/32 (6 bp) 1.67% -1 bp
- 2 Yr note: +1/32 (3 bp) 0.68% -2 bp
- 30 yr bond: +5/32 (15 bp) 2.75% -1 bp
- Libor Rates: 1 mo 0.169%; 3 mo 0.255%; 6 mo 0.357%; 1 yr 0.628%
- 30 yr FNMA 3.5 Jan: @9:30 104.17 +3 bp (-7 bp from 9:30 yesterday)
- 15 yr FNMA 3.0 Jan: @9:30 103.88 -3 bp (unch from 9:30 yesterday)
- 30 yr GNMA 3.5 Jan: @9:30 104.82 +1 bp (-6 bp from 9:30 yesterday)
- Dollar/Yen: 119.60 +0.12 yen
- Dollar/Euro: $1.2124 -$0.0032
- Gold: $1197.00 -$3.40
- Crude Oil: $52.86 -$1.26
- DJIA: 18,019.13 +36.06
- NASDAQ: 4790.71 +13.27
- S&P 500: 2082.30 +1.95%