Treasuries and mortgages were weaker early on better stock index trading, at 8:30 weekly jobless claims were expected to increase 10K, claims declined 10K to 332K and last week's claims were revised frm 340K to 342K. Weekly claims for unemployment compensation have been falling for weeks now, there can be little argument that the job market is getting better, slowly and not as quickly as anyone wants, but improving. Until the last few weeks claims had been hanging around the 360K to 370K, now 40K a week less, the lowest level in two months. The four-week average declined to a five-year low. The reaction pushed the 10 yr note to 2.07% briefly and 30 yr MBS prices -28 bp frm yesterday's close. Stock index futures also gained a few more points on the claims data.

The bond market is at critical levels this morning; the 10 yr note trading at 2.06%, a close above that level will be a new high for tis recent increase in rates and set up additional bearishness. The highest yield so far on an interday basis was 2.09% on the initial reaction to the Feb employment report last Friday. Fighting the tape with wishful thinking has not been a good idea for those that still believe interest rates will decline. Although we can expect some improvement when (if) the stock market ever retreats, the problem with that strategy is that rates have continued higher as stock indexes increase; so a correction won't likely take rates down to levels seen a week ago.

More key data tomorrow; Feb CPI, Mar Empire Sate manufacturing index, Feb industrial production and factory use and the U. of Michigan consumer sentiment index.