Thursday, October 8, 2009

Today's sale of $12 billion of 30-year bonds will conclude this week's $78 billion, four-part borrowing spree by Uncle Sam. Dealers will likely approach today's auction a little more cautiously than they originally intended prior to the release of this morning's surprisingly strong initial jobless claims report from the Labor Department.


The government said their data shows the number of American workers filing first-time jobless claims dropped 33,000 during the week ended October 3rd - completely offsetting the prior week's increase and reaching a nine-month low for this measure of labor sector health. The four-week moving average for new claims, considered a better gauge of underlying trends since it irons out week-to-week volatility, declined for the fifth straight week. According to analysis provided by the "Dismal Scientist", initial claims appear to be falling as quickly in this cycle as they had following the major recession of the mid-1970's and early 1980's - a hopeful indication of better days to come for the unemployed. It is still far too early to declare the crisis in the labor sector is over - but there is an increasing number of signs hinting the worst of the disaster may have passed.

Companies are now in a position where further job cuts will be limited - but it will probably be a number of months yet before the "now hiring" signs go up in significant numbers. Until then -- the story from the labor sector will tend to support steady to perhaps fractionally lower mortgage interest rates.