Daily Market Update 3/3/11

Rates faced upward pressure Thursday following the release of stronger than expected economic data. Weekly Jobless Claims fell to 368,000, well below forecast, and to the lowest level since May 2008. Productivity rose 2.6%. An increase of 2.3% had been expected. The European Central Bank (ECB) held rates unchanged, but the head of the ECB surprised investors by suggesting the central bank may raise rates at their next meeting in April to fight inflation. The Institute for Supply Management services index rose to 59.7. Readings above 50.0 indicate expansion in the service sector of the economy. Investors now turn their focus to tomorrow's release of the most important data of the month, the Non-farm Payrolls Report. Consensus forecast calls for a net job increase of 180,000 in February, with the Unemployment Rate seen rising to 9.1%. Any significant deviation from these estimates may cause volatility in the mortgage-backed securities market. No other key data will be released today.