Data

Initial jobless claims totaled 201k, 9k less than expected and down from 204k last week. This brings the 4 week average down to 206k from 208k last week. November 1969 was the last time it was lower. Again, this reflects the very tight market for labor where the leverage is shifting to employees from employers.

After falling from 25.7 to 11.9 last month, the September Philly manufacturing index rebounded to 22.9. The estimate was 18. New orders rose to 21.4 from 9.9 but was 31.4 in July. Backlogs got what it lost in August. Inventories fell almost 19 pts and went negative which could reflect some hangover from the product grab seen due to shipping of product concerns. Employment and the workweek rose after dropping in August. Prices paid and received fell sharply m/o/m most likely due to the drop in commodity prices but delivery times (lengthening) rebounded after last months decline.

As for the 6 month business outlook, it fell 2.5 pts but after jumping by 10 last month. Capital spending plans fell slightly but to a 4 month low.

The Philly Fed summed up the report by saying “Responses to the Manufacturing Business Outlook Survey indicated continued growth for the region’s manufacturing sector in September. The survey’s broad current indicators increased from their readings last month. Looking ahead six months, the firms remain optimistic, although most future indicators moderated somewhat from their readings in August.”

I say, this number is so all over the place month to month that we must smooth it out and the 22.9 print is right smack at the 6 month average of 23. Unfortunately there is no question on the level of ‘exports’ in order to gauge overseas activity.

Bond yields are at the high of the morning but did move after the 8:30 data. The 10 yr at 3.09% is about to kiss that 3.11% level discussed.