MBS up 5 bps early ; Stocks pretty flat

Bonds were sideways in Asia and then stronger in Europe. 10yr yields were at their lowest levels of the day (3.253) just after the 8:20am CME open. After the Jobless Claims data, bonds have paradoxically lost some ground.

Jobless Claims: 228 vs 200 f’cast, 246 prev

last week revised up from 198.  Plus there was a big reworking of the methodology of seasonal adjustments.  This had a material change in previous reports over the past 5 years, making the number much higher and more reflective of what we would have thought was happening.   These were almost fake numbers, which have now been corrected.

Removing some of the noise, the 4-week average is now near 240k.  Highest 4 week average since 2018 when removing COVID.

Challenger Job Cuts: 89.7k vs 77.8k prev

There are two ways to approach that: one that involves the data and one that doesn’t.

Using the data as an explanation, we’d have to consider that seasonal adjustment were re-factored this week, so the 228k–despite being quite a bit higher than forecast–was actually a decent improvement over last week. In the labor department’s words: “The advance number of actual initial claims under state programs, unadjusted, totaled 206,931 in the week ending April 1, a decrease of 17,262 (or -7.7 percent) from the previous week.”

The other way to approach the move (and probably the incorrect one) would be to line up the market movement with geopolitical headlines from Xi on the Ukraine war (he called for peace/ceasefire right at the time the Jobless Claims data was released). The absence of movement in other parts of the financial market makes it highly unlikely that it was a consideration for bonds.

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