Thursday, 7/2/09 4:30 PM edt
The DJIA ended -223, NASDAQ -49, S&P -27. 10 yr note +12/32 3.50% -4 BP. MOrtgage prices +6/32.
June employment was much worse than analysts were expecting. Non-farm jobs declining 467K over 100K more than was thought. The unemployment rate at 9.55 was a 0.1% better than what was expected. Weekly claims for unemployment were on target, 614K filings for new unemployment, less than 627K last week but still bothersome as more each week loss their jobs.
The Treasury announced next week's auctions; next Monday $8B of 10 yr inflation indexed notes (TIPS); on Tuesday $35B of 3 yr notes, Wednesday $19B of 10 yr notes and Thursday $11B of 30 yr bonds. Supply will put pressure in the rate markets but it may be balanced with the stock market if it continues to decline as it did today.
Now that the pretty poor jobs report is over and done with the market will concern itself with how to take down all the supply coming through in the 3-30-yrs. The market was given some support on the less aggressive comments from ECB's Trichet following their rate meeting while global bonds were generally higher.
The week ahead offers little in the way of data outside of the ISM services report Monday so the auctions will be the focus. The first of the auctions hit Mon with the $8B 10-yr TIPS, while the Fed will be in buying in the 4-7-yr space as they continue to work their outright bond buying.