Mixed Messages

Jobless Claims in U.S. Unexpectedly Rose Last Week (Update1)

By Courtney Schlisserman

June 17 (Bloomberg) -- The number of Americans seeking jobless benefits last week unexpectedly rose to a one-month high, indicating firings are staying elevated even as the U.S. economy grows.

Initial jobless claims increased by 12,000 to 472,000 in the week ended June 12, Labor Department figures showed today in Washington. Economists surveyed by Bloomberg News projected 450,000 claims, according to the median forecast. The number of people receiving unemployment insurance rose, while those getting extended benefits dropped.

Some companies are trimming payrolls to boost or maintain profits at the same time overall employment has grown each month this year. The figures show that bigger job gains needed to spur consumer spending, which accounts for 70 percent of the economy, may be slow in developing, keeping the unemployment rate close to 10 percent.

“The labor market is not improving,” said Steven Ricchiuto, chief economist at Mizuho Securities USA Inc. in New York. “If you really are going to have a sustainable recovery, you need the labor market to improve.”

Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates. Today’s report coincides with the week the government surveys companies for its monthly employment report.

Consumer Prices

Separate figures from the Labor Department showed consumer prices fell in May for a second month. The consumer price index dropped 0.2 percent, the biggest decrease since December 2008 and reflecting cheaper gasoline.

Spain Sells $4.3 Billion of Debt; Bonds, Euro Gain (Update1)

June 17 (Bloomberg) -- Spain sold 3.5 billion euros ($4.3 billion) of bonds, the maximum set for the auction, easing concern that it will struggle to finance looming debt maturities. Stocks and bonds and the euro rallied.

Spain sold 3 billion euros of 10-year debt at an average yield of 4.864 percent, less than the 5.04 percent that the bonds traded at today before the sale. Demand was 1.89 times the amount on offer. It also sold 479.2 million euros of 30-year debt at 5.908 percent, and the bid-to-cover ratio was 2.45, higher than the 1.38 at the previous sale on March 18.

Spain, which faces debt redemptions of 24.7 billion euros in July, is trying to convince investors it can cut the third- largest deficit in the euro region, while propping up the country’s savings banks and lifting the economy out of a two- year slump. Spanish bonds rose after the sale and the yield premium investors demand to buy the debt over German bunds narrowed from a euro-era high yesterday.

The strong demand for Spanish bonds should help restore confidence,” said Ciaran O’Hagan, fixed income strategist at Societe Generale in Paris. “The good demand was only possible after considerable cheapening of Spanish bonds over the past days.”


We are continuing to get mixed messages on the direction of the economy.
  • The labor market in the US remains very weak with a surprise to the downside.
  • The bond market in Spain accepted a large offering of Spanish bonds with good bid to cover ratios.
  • The Baltic Dry Index has been falling steeply for the past three weeks.  Is this a deflationary indicator?
  • Copper remains range bound in the $3.00 range.  This is below the 200 day MA and a Death Cross appears to be forming.