Weekly jobless claims were about what was expected, +8K to 312K. The 4 week average declined 2500 to 310,250. No reaction to the report ahead of tomorrow’s May employment report and most focus this morning on the ECB’s actions to stimulate its economy and attempt drive an increase in inflation that at the moment is so low (0.5%) that fears of deflation have ignited great fears at the central bank.
At 9:30 the DJIA opened +36, NASDAQ +10, S&P +3; 10 yr 2.61% +1 bp and 30 yr MBS price +2 bp from yesterday’s close.
Now that the ECB has essentially done what markets had expected, it is on to tomorrow’s employment report. There hasn’t been a lot of reaction to the ECB after the initial volatility at about 8:30; markets had already discounted it over the last week. Tomorrow’s employment report is hard to discount prior to actually seeing the data as generally the report presents surprises. The current ‘consensus’ is NFP jobs up 213K, private jobs +215K and the unemployment rate at 6.4% from 6.3% in April.
The technicals have broken down with the recent selling; the 10 now above its 20 and 40 day averages and the momentum oscillators are now in bearish territory. We will have to wait until tomorrow to decide where rates are headed; a weaker than expected report will help stabilize the markets. Ukraine/Russia is still a factor but unless a country wide civil war breaks out markets are not likely to be directly affected.