Mortgage bonds advanced 34bp following larger than expected weekly initial jobless claims. With layoffs in the service and construction industry it was no surprise that reports jumped by 38,000 to 407,000 reaching a two year high. The more widely watched four-week moving average for initial jobless claims increased by 15,750 to 374,500, also a two year high reading. The consensus estimate was for 365,000 new claims. This data suggests a weakening trend in the labor market and may also signal a weak monthly Jobs Report for tomorrow.
Bonds gave up some of their gains as the day wore on following a better than anticipated ISM Services Index for March. The Index measures activity in the service sector of the economy and although the reading came in below 50% at 49.6% indicating a slight economic contraction, analysts were expecting a lower level of 48.5% or worse. The news allowed the major stock indexes to pick up off of their lows while pushing bond prices off of their intraday high prices. The Dow Jones Industrial Average edged 20 points higher to close at 12,626; the NASDAQ Composite Index picked up a point to close at 2,363; and the broader S&P 500 Index also added a point to close at 1,369. What is this telling us? If you're prospecting first time buyers, how do you profit on a market like this?