Jobless Claims fell by 34,000 to 388,000 in the week ending December 25. Who wants to fire someone on Christmas? This helped the 4-week new claims moving average dip from 426,500 to 414,000. Maybe Ebenezer Scrooge?  Continued Claims jumped from 4.071 million to 4.128 million. Maybe I should be this data reliable at this time of year? Seasonal adjustments are impacting the results. The unadjusted data says...

The advance number of actual initial claims under state programs, unadjusted, totaled 521,834 in the week ending Dec. 25, an increase of 24,879 from the previous week. There were 556,517 initial claims in the comparable week in 2009. 

Plain and Simple: So the seasonally adjusted initial claims number declined by 34,000 people while the unadjusted total climbed 24,879. I am taking this report with a grain of salt. Especially after noticing this print was outside even the lowest consensus estimate taken down by Reuters. The range of estimates was 430k to 395k. Sounds a lot like the November NFP number (which was worse than even the worst forecast).

Either way....

Jobless Claims are at their lowest level since July 12, 2008 and when you smooth out the data to remove seasonal distortions, the 4-week moving average is at its lowest level since July 26, 2008.We cannot ignore the general trend of improvements or the fact that we've settled in a range below 450,000 new initial claims. This is great! Now if we could only find work for the 17 or so million unemployed and underemployed Americans who are dragging on our recovery (including those not looking for a job).

Flows went two-way and volume spiked as new claims data flashed. Short sellers tried to gain some ground but were quickly squashed by month-end extension buyers (big one this month!) as well as dealers who are looking to flatten out positions into year-end. Liquidity is again lacking, hence we the instant reaction was a bit gappy and 10s jumped as high as 3.41%, but we're leveling out now and MBS have performed well vs. benchmarks even though we're in the red to start the day and mortgage rates will still move higher on the first release of pricing (unless your lender was skimpy on the reprices yesterday).

Chicago PMI at 945.