84 billion in T-notes auctioned next week...initial jobless claims down...bond down

Fnma 4.5% bond lost 25 basis points putting upward pressure on rates.  It was interesting though that the bond market didn't hardly react to the notion that there will be 84 billion dollars in t-notes auctioned off next week.  We are getting used to the idea and that number is so much less than some of the monster auctions that have been taking place in recent months.  Still: we are in the 5.25% range on the 30 year fixed notes.

This may be a little oversimplified, but check this out: 

Remember: T-notes are like little "I.O.U's" from the feds.  Each comes with a promise to pay you back at a certain interest rate and comes at a certain price.  The US Government guarantees that they will pay you when the time comes and you give them your money to use in the meantime.  Selling bonds gives the treasury "money" to use.  All the added money from the sale of bonds comes with a price tag. When it comes time to pay back the holders of those bonds with interest, the only way to pay them back is by selling more bonds since the money will be appropriated elsewhere.  This extra money that is raised simply by printing off and selling more treasury notes is why many who are criticizing these moves are saying that the feds are simply "printing money" to pay for their show right now.  Hmm.

Dow picked up 33 points today.

Initial jobless claims are in the low 400,000 range again for last week!  This is considerably lower than the expected 489,000 claims.

Jobs report comes out tomorrow and analysts are only expecting a loss of 35,000 jobs.  This is also good news.  We have been over 100,000 jobs lost in this report this year on more than a few occasions.  This one could be a market mover and good news will push money out of bonds.  Watch for rates to come up some if that is the case.

Cheers!

Chad
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Chad Schauers

Personal Cell: 406 799 8613
Personal Email: metchad@gmail.com