Market Analysis

Despite the Dow falling 138 points the bond market did not gain much ground in early morning trading.  However, we are now seeing further deterioration in stocks and some improvement in bonds.  It is not clear yet whether or not the improvement will translate into updated rate sheets mid day because the early stock market declines may abate.  Stocks are a critical juncture right now, with the S&P 500 and Dow testing key support levels.

Stocks are responding to higher Initial Jobless Claims for the week ended 1/16/10.  Claims were expected to be down by 4,000, instead they were up by 36,000.  However, according to Bloomberg News, "distortions cloud what on the surface is a negative jobless claims report..... The Labor Department said claims piled up due to short holiday staffing at state processing centers. Market News International is quoting a Labor Department analyst as saying the week's gain is 'not economic, but administrative.'"   Continuing claims data did show improvement, down 18,000 to 4.599 million.   They were expected to be up by 4,000.  However, at least in part, the decline in continuing benefits reflects the expiration of benefits as the unemployed fall out of the insured workforce.

In other economic news, the Conference Board's December's Leading Indicators index climbed to 1.1%, which was stronger than the .7% expected increase.  The January Philadelphia Fed Survey came in weaker than expected with a 15.2 reading vs expectations for 18.8.