This morning, bond prices are a touch higher following the weekly jobless claims data release. Initial unemployment claims fell to 444k in the week ending May 8th, down from an upward revised 448k.  Economists had expected claims to drop from the previously reported 444k to 440k.  Initial claims of 444k were a touch higher than estimates, but still a mere 5,000 above the year’s low and at the bottom end of the range which has persisted throughout 2010. What is surprising is that job losses continue at such a high pace despite recently strong payroll growth. There is some evidence for payrolls recovering ahead of claims at the end of sharp recessions, and on the other hand, in a period of very prolonged unemployment, the newly-employed may more readily file for claims, raising the ratio of claims to layoffs.  If that were the case, however, it might be expected that claims would fall a bit more quickly as the labor market improves enough to convince the newly laid off that they can find jobs in a short time period.  We do not appear to be at that point, though claims continue to edge downward ever so slightly.  This week’s reading is the 3rd lowest since the intensification of the recession in Sept 08’.

Today, the Treasury will auction 30-year bonds and tomorrow’s economic calendar includes numerous interesting numbers including April retail sales, production & utilization, and the Univ of Michigan consumer confidence index.  With the weekly auctions about to be complete, the market appears to be getting its familiar lift.  We saw a quick push on the 10yr note back above the 8 day moving average at 119-005 after dipping below that measure overnight.  The market has not closed below the 8 day moving average since April 26th.  Also in that area is the midpoint of yesterday’s range trade at 119-015.  A close above both levels today would boost the buy signals on daily charts that have suffered with the drop from last week’s high.  The 10yr is currently trading up 8s at a 3.541yld (118-305 on futures), along with mtg backs up 6.