Thursday, October 14, 2010

New first-time claims for jobless benefits filed during the week ended October 9th were higher than expected -- and added another degree of certainty to investors' presumption that Fed Chairman Bernanke and his fellow central bankers will vote by November 3rd to pump significantly more money into the economy.




The Labor Department reported earlier this morning that initial weekly jobless claims rose by 13,000 to 462,000 during the latest survey period. Until/unless the total number of initial jobless claims falls to 400,000 or less on a week-over-week basis -- this data series will tend to support steady to perhaps fractionally lower mortgage interest rates.




The Labor Department also reported this morning that the headline September Produce Price Index doubled expectations, rising 0.4% during the month. The so called "core" producer price index, a component of the broader report that excludes the more volatile food and energy costs, rose a modest 0.1%. On a year-over-year basis inflation at the gate of the nation's farms and factories is running slightly hotter than most analysts had anticipated.


We will find out tomorrow morning whether wholesalers of goods and services have been able to generate enough pricing power to push through their rising costs to consumers - or whether these businesses are continuing to absorb the price increases themselves. The Labor Department will release the September Consumer Price Index figures at 8:30 a.m. ET.



Uncle Sam will wrap up the last of his three-scheduled debt auctions for this week with the sale of $13 billion worth of 30-year bonds this afternoon. Tuesday's three-year note sale and yesterday's ten-year note sale drew half-hearted bidding from market participants - and today's offering won't likely break the string. The auction concludes at 1:00 p.m. ET.


As long as this debt offering is not a complete bust with respect to bidding activity -- there is a chance we may see a modest post-auction "relief rally" develop in the government debt market. If so, look for a post-auction "relief rally" to limit or perhaps completely reverse this morning's light round of selling pressure in the mortgage market.