Jobless claims rise higher

Thursday, October 25, 2007

ECONOMIC DATA / NEWS

September New Home Sales beat analyst expectations of 765,000, coming in at 770,000.  Although this was unexpected, it was not a dramatic move considering we are still about 23% down from a year ago.  New Home Sales provide more than just a look at the demand for housing.  This data also gives a reading on economic momentum.  When you are dealing with a slow economic news day, it weighs in very heavily. 

A second straight month of declining durable goods orders is not a good sign for those who are worried about a recession.  They fell 1.7% in September, so they missed estimates of 1.1% by almost a full 3%. 

Weekly jobless claims came in at 331,000 for last week, proving that the previous week was not simply a fluke due to the holiday-shortened week.  That gives us two straight weeks of claims over 330K, when the average has been closer to 310K.  This is one clue that the payrolls figure is going to be low for October when it is released next Friday. 

After yesterday’s sell off in the stock market, the Dow and S&P 500 are seeing some modest gains, while the NASDAQ is down slightly.  The sell off from yesterday was due to some negative earnings reports coupled with even more layoff announcements in the financial services and banking sectors.

Oil prices are up again today.  This is after declines in U.S. crude and gasoline inventories from last week.  Although analysts were expecting inventories to increase by about 300,000 barrels, last weeks supplies of crude fell by 5.3 million barrels.

TECHNICAL ANALYSIS

After seeing multiple days of the FNMA 30-year 6.0% gapping upwards, we should expect to see things level off a bit today, if not decline slightly.  Yesterday we tested out the resistance level of 101.06, and we even peaked above it briefly.  We are looking at a support level of 100.62.  Currently, we are flat on the day.  But we are down on both securities since rate pricing came out.

Turning our attention to the 10-year Treasury, the yield is up to 4.36% at the moment, which should cause no reason for alarm, because the 10-Year Treasury Yield’s movements can be a little more dramatic than the MBS.

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