Today's Economic Data Highlights

After this morning’s news of a bounce in mortgage applications, we have two labor market indicators—layoff announcements and ADP—and the Treasury’s quarterly refunding announcement. Small POMO in the 10-17 year range of $1.5-$2.5 billion.
The Mortgage Bankers Association’s index of mortgage applications rose 11.3%, almost erasing the 12.9% drop of the prior week.  The indexes of purchase loans and refinancing both shared in the increase, advancing 9.5% and 11.7%, respectively.  The purchase loan index remains depressed, however.
7:30: Challenger job cuts for Jan….probably still down?  The count of layoff announcements always rises between December and January, but the seasonal factor has fluctuated with the condition of the labor market in recent years, rising about 20% in good years and more than 50% in bad years.  If we assume we’re somewhere in between—say a 35% increase—then we’ll probably see announcements of about 43,000, or about a 40% year-to-year drop.
8:15: ADP employment report for Jan…will it revert?  Two high-side misses in a row!  That’s the first time since November 2008, just before the release of version 4.0 in December 2008.  Those who like to forecast this forecast of the change in private-sector payrolls are counting on mean reversion, looking for an increase that’s not quite half of the December surge.  If these expectations are right, and if the report conforms to its usual post-December 2008 pattern of missing to the low side, then we could be looking at another strong payroll report on Friday.  On the other hand, with the spotty record of this report…
Median forecast (of 33): +140k, ranging from +50k to +150k; last +297k.
9:00: Quarterly refunding announcement….will they shut down the SLGS window?  We expect a package of $72bn—$32bn in 3-year notes, $24bn in 10-year notes, and $16bn in 30-year bonds—to redeem $23.4bn in maturing issue and to raise $48.6bn in net cash.  This represents no change from the November refunding in either the size or composition of gross issuance.   We do not expect any changes in the coupon schedule, but it is possible that Treasury will use this opportunity to suspend issuance of State and Local Government Securities (SLGS) in anticipation of reaching the debt ceiling sometime this spring.  Absent a major surprise from Congress on the debt ceiling, that suspension is coming as the next logical step in creating room to continue the marketable borrowing schedule.  It's just a question of when.