We see continued good new on the U.S. economic front, tempered by earlier events occurring in Europe. Sound familiar?
Initial jobless claims stayed below the 400K threshold in the past week at 388K, down 5,000 from last week's upwardly revised number of 393K. Even more substantially, the 4-week moving average, which removes some of the week-to-week volatility to give a clearer trend overall, has finally made it under 400K to 396,750. Not great, but still moving in the right direction.
Housing numbers this morning were decent, as well: October housing starts were down 0.3% after a big September surge of 7.7%. While it is nice to see homebuilders getting more busy again, another big upswing last month would have brought new questions about increased inventory in housing. Building permits, a handy indicator of future housing numbers, were up 10.9% in October after being down 5.8% in September. And so the roller-coaster ride continues…
One reason why futures are down before the bell today is due to new developments out of Europe — namely Spain, the "S" in PIIGS. The Spanish Treasury today sold 3.6 billion euros worth of 10-year bills with a maximum value surpassing 7%. This is the highest rate since the inception of the euro.
This 7% figure has been bandied about in recent days, but pertaining to Italy, not Spain. So the contagion is clearly far from contained, at least within the PIIGS of the Euro-zone. Can we expect to hear from Portugal before the week is out, or will perhaps France be the next to capture this bleak headline?
So if 400K is a key threshold on the U.S. jobless claims side, 7% may be considered the threshold in Euro-zone T-bills. Futures have crept into positive territory this morning after initially being down, so maybe investors are taking improving jobless claims more to heart these days.
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