2/26/2009

The unemployment line is getting even longer...Initial Jobless Claims rose 36,000
last week to 667,000, worse than the 625,000 expected and the highest level since
October of 1982. The number of people collecting benefits reached a record high,
rising 114,000 to 5.11 million.
New Home Purchases dropped 10.2% to an annual pace of 309,000 versus
estimates of 324,000, the lowest level since data collection began in 1963. The
median price decreased 13.5% to $201,100, the most in almost four decades. The
number of new homes for sale at the end of the month fell 3.1% to 342,000. The
supply of homes at the current sales rate surged to a record 13.3 months' worth.
Durable Goods Orders fell for a sixth straight month both domestically and from
foreign demand as the global recession marches on. Orders for Durable Goods,
from washing machines to airplanes, fell 5.2% in January versus estimates of a
2.5% drop. After excluding transportation orders, durables dropped 2.5% when
estimates were looking for a loss of 2.2%.
General Motors posted an enormous and larger than expected $9.6B loss for the
4th quarter. Even after a stiff round of bad economic news and sour corporate
earnings, Stocks are showing some resiliency and are trading higher.
More paper - another round of government auctions this afternoon in the form of
$22B 7-yr Notes. Yesterday's $32B offering didn't go over that well and the $94B
total hitting the market this week has weighed on the entire Bond Market.
We are switching to a Floating bias, after maintaining a locking stance for the past
couple of weeks. Prices are trading just above support at $100.12, a level that has
served as a good floor in recent weeks. Should prices fall beneath $100.12, the
Bond could easily drop another 60bp or so to the next clear floor of support