morning stuff

Initial Jobless Claims were disappointing at 472k, 17k higher than expected and up from 459k last week. A Labor Dept official said the rise was due in part to the end of the school year where bus drivers, cafeteria employees and others lose their jobs but I’m not sure why this wasn’t seasonally adjusted away. Continuing Claims were 66k above forecasts and were up 43k on the week. Extended Benefits however saw a sharp decline as it fell by a net 376k but with the lack of extension of unemployment insurance out of Congress many people may have fallen off the rolls rather than by finding new jobs. None of the Gulf Coast states saw sharp increases in the number of those filing claims. Bottom line, following the weak private sector job growth seen in yesterday’s ADP report, today’s initial claims data continues to point to a lackluster labor market and another jobless recovery.

China’s economy showed further signs of cooling, albeit still at healthy levels, as both the public sector and private sector weighted PMI mfr’g #’s fell in June. The other fastest growing economy in the world, India, saw a modest decline in their PMI. The euro is rising to its high of the week after the Euro Zone final PMI index was in line but Germany was a touch better than expected. Spain sold 5 yr notes and the auction wasn’t much influenced by Moody’s comments yesterday as the yield was just 10 bps above the prior one two months ago but did come at a lower bid to cover. Spanish CDS is down a touch and Spanish bank stocks are little changed. Both 3 mo Euribor and EU 3 mo LIBOR however continue higher even as Q end pressure should have abated. Japan’s Q2 Tankan mfr’g index was +1 vs expectations of -4 and its positive for the 1st time since Q2 ’08. With respect to US markets and the end of Q noise, Payrolls and earnings await and over the next week we’ll see how much risk aversion window dressing influenced markets over the past two weeks.

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