Get To Work

Well, this is the almost the last day that I get to look at my June parody of a motivational calendar, pictured above.

Now to the boring stuff.  Rates are near the yearly high even though Greece has been given until Monday to strike a deal and avoid defaulting on their billion dollar payment due by Tuesday.

Rumors are also swirling that if no agreement is reached, a form of bridge financing may be struck in an effort to kick the can down the road a few more months.  There is also talk of a multi agency bailout plan, which will be reviewed at tomorrow’s meeting.  You know it’s bad if you have a meeting on a Saturday.

Global Bond yields continue to edge higher as investors move (though nervously) into riskier assets like Stocks.  Nervously because China’s Shanghai Composite just suffered its biggest 1-day loss in 5 months.  Chinese Stocks are seen as extremely over-valued as a large portion of the run up has been heavily financed by margin trading.

The Struggle

One more GDP reading for the first quarter shows a decline in Productivity of 3.1%, even lower than the initial -1.9%. Despite slowing wage growth, those who do have jobs are not getting the ax as frequently.  Reported planned layoffs declined a whopping 33% from this time last year.  We also saw a 2.9% decrease in the number of individuals filing for unemployment this week compared to last week.  The “official” BLS Jobs Report comes out tomorrow morning.

After a three day free-fall where MBS gave up 156bps (roughly 1 1/2 points), bonds are struggling to work their way back up the side of the mountain.

Rates Still Unsettled

No real reports out today.  Markets are still processing Friday’s Jobs Report, which showed almost 3x more jobs created than the month before, but the overall trend line is downward.  MBS pricing improved Friday but has now erased all of the gains from the Payrolls report.  Rates look to be getting worse once again.