Stocks higher on encouraging job data

Dow rose 78, advancers ahead of decliners 2-1 & NAZ is up 14. Dow is extending gains from the last hour of trading yesterday. Banks are weak on a up day, hurt by Citigroup's (C) expected massive sale of stock needed to repay its TARP loan.


S&P 500 FINANCIALS INDEX

Value 191.98

Change -0.22

% Change -0.1%

MLPs are flying again. The Alerian MLP index is up 1½ to the 271s. If it can add another 5, it will have a 100 gain for the year! REITs muddle along having gotten thru the recent downturn in good shape, the index is up pennies today. Junk bond funds are higher. The yield on the 10- year Treasury bond is up 6 basis points to 3.48% & the yield on the 30-year bond is flattish at 4.47% before today's auction.


Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks





Oil was little changed, but still significantly below the 75 floor which had held for the last for a couple of months. Buyers are discovering gold again.

CLF10.NYM

...Crude Oil Jan 10

...70.59

... 0.08 .......(0.1%)

GCZ09.CMX

...Gold Dec 09

...1,130.00

... 9.60 .......(0.9%)

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The number of workers seeking jobless benefits rose more than expected last week, after falling for 5 straight weeks. However claims have fallen steadily since the summer. Initial claims for unemployment rose by 17K to 474K, above expectations of 460K. The 4-week average fell to 473K, its 14th straight decline & the lowest in more than a year. The number continuing to claim benefits fell 303K to 5.16M, the lowest level in 10 months. But continuing claims do not include millions who have used up the regular 26 weeks of benefits typically provided by states & are receiving extended benefits for up to 73 additional weeks paid for by the federal gov.

•Average Jobless Claims in U.S. Over Past Four Weeks Drop to One-Year Low

Jobless claims - 1 year




Jobless claims 4 week avg - 1 year





The yield curve has reached 366 basis points (gap between the rates on the 2 year notes & 20 year bonds). In simple terms, it is much cheaper for the Treasury to sell 2 year notes (or short ranged maturities ) than long term paper. The shift to longer- maturity debt raises concerns that investors will demand higher yields to offset the risk of inflation as gov spending drives the record deficit of $1.4T. At lunchtime, the Treasury will auction off $13B of 30 year bonds.

•Treasury Yield Curve Widens to Most Since 1992 Before $13 Billion Auction

30-Year Treasury Yld Index - 6 months




Citigroup is under pressure to repay its TARP loan after Bank of America (BAC), Dow stock, recently announced its plans. This probably would require a massive sale of shares (around $20B). In addition, the gov owns a 34% stake in Citi which would have to be dealt with. Citi execs are earning their pay & bonuses.

•Pandit Presses Citigroup TARP Talks That Took Lewis Two Months to Navigate


Citigroup --- 2 years





Markets are behaving much better in the absence of dreary news. This could be the market's first good day in since Dec 1.


Dow Jones Index --- 2 weeks