Some mixed economic data out this morning, as jobless claims contiued to fall, now at 4 year lows while Q4 GDP's third revision dropped a bit lower than expected at 3.0% versus 3.2% expected. That said, the latter is old news. The one piece of very nice news is on personal incomes which jumped sharply from previous estimates:
- Personal income was $13.162 trillion at a seasonally adjusted annual rate, $3.3 billion more than previously reported. Disposable income was $10.6 billion more than previously thought, likely reflecting the strengthening labor market.
- Gross domestic income, which measures output from the income side, increased at a 4.4 percent rate — the fastest since the first quarter of 2010 — from a 2.6 percent rise in the third quarter.
Meanwhile there is some pressure coming from Europe as Spanish and Italian bonds show some uptick in yields – this has been happening over the past week and reminds one of Jason from Friday the 13th – the issue that cannot be killed.
- The yield on Spain’s 10-year bond climbed 11 basis points, with the spread to German bunds widening 12 basis points. The Italian 10-year bond yield rose nine basis points to 5.19 percent.
The LTROs bought time but surely Europe expected the can to be kicked much more farther down the road, so we'll see if this is a small flare up or the start of something larger.
The S&P 500 did rally in the closing 30 minutes yesterday to recapture 1404, but are back under pressure this morning. The same levels of importance remain, as mentioned yesterday – 1378 to 1387.
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