Sponsor Forex Brokers Bond Markets Largely Unchanged Following U.S. Initial Jobless Claims Rise

Market Updates | Written by CEP News | Jul 24 08 13:04 GMT |

(CEP News) - Fixed income futures across the world kept trading within their respective ranges following the release of continuing and initial jobless claims in the U.S., despite the fact that each print diverged from expectations. Initial claims for unemployment benefits in the United States actually rose to 406k in the week ending July 19, following an upwardly revised 372k reading in the previous week. Continuing claims fell back 9k to 3.107 million for the week ending July 12. The consensus forecast was for initial claims to come in at 380k and continuing claims to increase to 3.160 million. U.S. 30-year futures were up 19.5 ticks to 114-07 after peaking at 114-09 just prior to the 8:30 a.m. EDT release. Ten-year futures were up 13.5 ticks to 113-14, similarly rising to highs of 113-18 before the figures came out only to fall slightly in price on the data. Five-year notes were up 11.5 ticks to 110-09 and two-year notes were up six ticks to 105-18.5. "This [initial claims] jump reflects the continuing effects of a deeply abnormal auto retooling season," wrote HFE chief U.S. economist Ian Shepherdson. "Production was not initially cut as far as usual so the spike in layoffs was smaller than the seasonal 'expected' and headline adjusted claims fell. Now that the retooling is over the drop in unadjusted claims is smaller than usual so the headline number has rebounded. Over the next couple of weeks claims should revert to their underlying trend, which we think is about 390-to-400K, recession territory." On the U.S. spot market, yields were down, with the 30-year yield down 2.2 bps to 4.652%, the 10-year yield down 3.0 bps to 4.087%, the five-year down3.1 bps to 3.462% and the two-year down 9.7 bps to 2,734%. "With the 2yr and 5yr auctions this week, we expect the curve to bottom in the next couple sessions and resume steepening," wrote RBC Capital Markets fixed income strategist T.J. Marta. "Our trading desk believes the 5yr auction [1 p.m. EDT] could be less well received, as its value is less clear given the positive developments in the GSE and agency space." In cross-Atlantic markets, September and December 2008 Euribor were increasing with September contracts up 2.5 ticks to 94.970 and December contracts up seven ticks to 94.865. German 10-year Bund futures were up 64 ticks to 110.61 while the five-year Bobl was up 58 ticks to 106.180. The two-year Schatz was up 26 ticks to 102.590. The British 10-year Gilt was up 24 ticks to 105.69. It had increased 26 ticks with the release of worse-than-expected UK retail sales at 4:30 a.m. EDT before losing 26 ticks to 105.62 at 5:35 a.m. EDT. Meanwhile, September Short Sterling was up five ticks to 94.125. All data taken at 8:37 a.m. EDT. By Ryan Szporer, rszporer@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , with contributions from Patrick McGee, pmcgee@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , edited by Nancy Girgis, ngirgis@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it CEP Newswires - CEP News © 2008. All Rights Reserved. www.economicnews.ca The Copying, Broadcast, Republication or Redistribution of CEP News Content is Expressly Prohibited Without the Prior Written Consent of CEP News. A copy of CEP News disclaimer can be found at http://www.economicnews.ca/cepnews/wire/disclaimer.