Better than expected Jobless Claims report

Treasury prices are reversing yesterday’s rally as market participants react to this morning’s Economic Data and reports that a new Greek coalition government will be led by former vice-president of the ECB, Lucas Papademos. Currently, the 2-year T-note is trading 1/32 lower to yield 0.228%. Meanwhile, the 5-year T-note has dropped 5/32 to yield 0.902%. The benchmark 10-year Treasury note has lost 14/32 to yield 2.045% and the long bond has declined 1 and 7/32 points to yield 3.085%.

Providing encouraging news on the labor market, this morning’s release of the Initial Jobless Claims report by the Department of Labor showed that first time claims dropped more than expected during the latest week to 390,000; analysts were expecting claims to remain flat at 400,000. Furthermore, the more stable 4-week average number of initial claims dropped by 5,250 to 400,000 versus the 405,250 number registered previously. Continuing Claims also dropped more than anticipated versus the previous week. Analysts were forecasting a decline to 3.680 million versus the reported 3.615 million. In addition, the previous week was upwardly revised by 24,000 to 3.707 million.

The Bureau of Labor Statistics of the U.S. Department of Labor reported that the U.S. Import Price Index registered a change of -0.60% in October; analysts had estimated the IPI to remain flat for the month. The previous month’s data was downwardly revised to 0.00% instead of the 0.30% increase. The annual change was also lower than expected at 11.00% versus 11.80%. A lower than expected Monthly Import Price Index could mitigate concerns of inflationary pressures, making it easier for monetary policy makers to act again if necessary. The next round of inflation related data will come on November 15^th with the release of the Producer Price Index.

Additionally, the Commerce Department announced that the Trade Balance narrowed in September by 4.00% to -$43.10 billion versus the expected -$46.00 billion. Exports rose by 1.40% or $180.36 billion in part due to increase in sales of industrial supplies (3.20%); consumer goods (5.30%) and automotive vehicles (1.70%). Meanwhile, imports rose only 0.30% for the same period to $223.47 billion. This increase was mainly driven by industrial supplies (1.40%), automotive (2.10%), food and beverage (2.60%) and by a decrease in sales of capital goods (-1.00%), telecom equipment and computer accessories (-2.50%).