Mortgage Rates----
Europe’s stock markets trading better today and leading to a stronger open in the US at 9:30. Weekly jobless claims were expected to be up 4K, as reported claims increased 8K to 362K; last week’s claims were revised to 354K frm 351K. Continuing claims increased by 10K to 3.416 mil. A Labor Department official today said there were no unusual circumstances affecting today’s figures. The four-week moving average, a less-volatile measure, was little changed at 355,000 from 354,750, which were the fewest since March 2008. Twelve states and territories reported an increase in claims, while 41 had a decrease. Treasuries and mortgage prices were weaker prior to 8:30 and didn’t change on the claims data. At 8:45 the 10 yr note yield sat at 2.00% +3 bp frm yesterday’s close; MBS prices -2/32 (.06 bp).

Greece has until 10:00 pm in Athens to get lenders to agree on re-structuring debt; based on current count it now appears Greece will get the necessary participation. Holders of about 65% of the Greek bonds eligible for the deal, including Greece’s largest banks, most of the country’s pension funds and more than 30 European banks and insurers are now on board. 75% participation is the goal, based on comments from officials in Europe there will be enough to get the bailout funds necessary to avoid default. While Greece would prefer a voluntary deal, the government has said it will use collective action clauses to force holders of Greek-law bonds into the swap if the so-called private sector involvement falls short and it gets sufficient approval from investors to change the bonds’ terms. Bond holders are being forced to take a 53% write down on the debt. Europe’s stock markets are improving as the deadline approaches.

The ECB left its base interest rate unchanged at its meeting; nothing surprising it was widely anticipated.

The DJIA opened +60, the 10 yr note -6/32 at 1.99% and MBS prices unchanged. Earlier this morning the 10 yr tried 2.00% and mortgage prices were down 2/32 (.06 bp).

At 11:00 Treasury will announce next week’s auctions; 3 yr 10 yr and 30 yr issues will be auctioned in the regular monthly borrowing.

The rest of the day should be quiet in the bond and mortgage markets ahead of tomorrow’s employment data. The stock market should trade higher all session on the belief Greece will avoid default. Consensus estimates for non-farm jobs is for 203K jobs, 220K private jobs with the unemployment rate unchanged at 8.3%. Crude oil is higher again today on signs that sanctions on Iran are succeeding in cutting the nation’s crude exports. Gold higher on a weaker dollar this morning.

US interest rates remain generally unchanged and have been flat for weeks now. Technically the 10 yr has a slight bearish bias at these levels, however we do not expect interest rates will increase much on any selling. There is still an underlying thought in the markets that the Fed will step up with another buying program of treasuries and MBSs. Even though Bernanke tried to dampen the idea last week in his testimony in Congress, markets are not completely convinced the Fed is done. The foundation for the belief of more Fed buying is that the Fed wants to keep long term rates low to help the housing market.