Weekly jobless claims at 8:30 were better than forecasts; down 16K to 339K. Claims last week were the lowest since early March, so-called consensus estimates were at 350K. The 4 week average on claims was down 4500 to 357,500. As we said yesterday claims now are free from seasonal machinations.

A Labor Department spokesman said there was nothing unusual that affected today's figures, he said big swings in claims are common this month because of layoffs related to school vacations and holidays such as Easter that don't always occur during the same week each year. He also said the period of swings in unadjusted data should be coming to an end. The number of people continuing to collect continuing jobless benefits fell by 93,000 to 3 million in the week ended April 13, the lowest since May 2008. 27 states and territories reported a decrease in claims, while 26 reported an increase. Next week, the Labor Department will release April's report on the U.S. employment situation. Surveys forecast the labor market regained some ground, with payrolls expanding by 155,000 after an 88,000 a month earlier. In the six months ended in March, employment averaged 188,000.

Prior to the weekly claims the US stock indexes were a little better, then improved a little more. Europe's stock markets were better then fell off on data. The 10 yr note prior to the claims data was at 1.71% +1 bp, the rate increased to 1.72% by 9:00 am; 30 yr MBSs at 9:00 -12 bp frm yesterday's close. At 9:30 the DJIA opened -5, NASDAQ +12, S&P +3; 10 yr note at 1.72% +2 bp and 30 yr MBS price -6 bps.

The story continues to be the same in the global financial markets; central banks printing money at light speed to hold economies together. The Fed buying $85B a month outright and using the pay downs on the big MBS portfolio it holds to buy more; Japan now trying to reflate its economy and end its deflationary trend with money printing (easing like the Fed), next week the ECB is likely to lower its base lending rate. It is an experiment that is in virgin territory, massive moves to force investments into equity markets in attempts to increase economic growth and increase employment. So far, at least here in the US, employment hasn't seen much improvement over the last three years of Fed QEs. Employment better but at what eventual cost when the Fed and other central banks have to stop and reverse the flows.

Not only printing money to drive interest rates down; central banks are increasingly buying stocks. That is rather unnerving in the longer run but is in the present time frame holding markets from major declines. A recent survey by Central Banking Publications of 60 central bankers said 23% of banks now own stocks in their portfolios. The central banks, supposedly charged with protecting the $11 trillion foreign exchange markets, are buying stocks in record numbers. These banks are normally risk-adverse but are slowly and without much concern, increasingly taking on risk that someday will be widely seen as a major financial mistake. Central bankers taking on more risk is a disaster waiting to happen; in the meantime it looks good for the bond and stock markets.

At 1:00 this afternoon Treasury conclude this week's auctions with $29B of 7 yr notes.

Three times since early April the 10 yr note yield fell below 1.70% in daily trading, each time the note failed to close below it. Ignoring the intraday movements, the 10 has been stuck in a six basis point yield range since early April. No pressure to run rates higher, equally no momentum or buying when the note trades at 1.70%. 30 yr MBSs track the note, they too have been generally unchanged for three weeks. The technicals still hold positive biases after the huge rate decline that began mid-March driving the rate down from 2.05% to 1.70% in two weeks on the 10 and down 20 bp on 30 yr interest rates. We want to continue to float, but also strongly suggest keeping alert; if the 10 closes over 1.75%----just three bps away from present levels, we will quickly lock. Floating has gained about three weeks on MBS pricing, so floating even with the market flat, has improved pricing.

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