Prior to 8:15 this morning the 10 yr and mortgage markets were slightly weaker in price. At 8:15 ADP reported its estimate for May private jobs, thought to be up 150K, increased 133K; the average for the first five months this year 123K. Not much reaction to the weaker data. At 8:30 weekly jobless claims were expected to have declined 4K, as reported claims were up 10K to 383K after last week was revised from 370K to 373K. The 4 wk average on claims at 374,500 frm 370,750K; continuing claims at 3.242 mil down frm 3.278 mil as more unemployed lose their benefits. The continuing claims are the lowest since July 2008. Also at 8:30 Q1 preliminary GDP was expected at 1.9% and was as reported and down from +2.2% on the advance report last month; final sales in Q1 +1.7% frm +1.6% on the preliminary report. Market reaction on the early data took the 10 yr note to 1.60% -0.1% and mortgage prices +5/32 (.15 bp) frm yesterday's close. Stock indexes still held minor gains on the data but were well off the levels prior to the data. At 9:30 the DJIA opened +15, NASDAQ unch; the 10 yr note +5/32 at 1.60% and MBS 30 yr price +5/32 (.15 bp) frm yesterday's close. As the day has progressed rates continue to decline (see below) In Tokyo last night Fed's Bullard said he doesn't see the need for more QE frm the Fed. One man's opinion in a Fed divided. There remains a number of Fedsters that still want another easing. We continue our opinion that the fed will not ease at the June 19-20 meeting, and after that the Fed will hold off as it generally doesn't want to be seen as political into the Nov elections. At 9:45 the May Chicago purchasing managers' index, thought to be at 57.0 frm 56.2, took a big decline to 52.7. The components also weaker than thought; new orders index at 52.9 frm 57.4, the lowest read since Sept 2009, employment component at 57.0 frm 58.7; prices at 60.4 frm 68.6 on the decline of energy prices. Although markets are taking it badly in the stock market, the key indexes still are above 50 and expanding, albeit very slowly and weakening. Europe is having a serious negative impact on the US and global economies as it is clearly in deepening recession dragging the rest of the world along with it. That's it for scheduled reports today; tomorrow of course is the mother lode with the May BLS employment report; after the data this morning many traders already adjusting to a weaker than thought report. Spanish and Italian bonds rallied amid speculation the European Central Bank will announce measures to combat the debt crisis when it meets next week. Spanish 10-year bond yields declined from a six-month high today even as ECB President Mario Draghi told a European Union Parliament committee the central bank cannot fill the "vacuum" of the lack of fiscal prudence and governance in the euro area. Policy makers will meet on June 6. Round and round we go with conflicting news from the region. The safe haven move to US treasuries has moved more toward 30 yr bonds than the 10 yr note as investors are looking for higher yields. The 10 yr note this morning hit a new low at 1.59% for a nanosecond; the 30 yr bond declined 6 bp at 9:30 compared to -1 bp on the 10 yr; the 10 price +4/32 while the 30 yr bond up 25/32. Mortgage markets take their direction from the 10 yr, not the 30 yr. In Germany this morning their 10 yr bund traded at 1.25% compared to 1.60% on the US 10 yr. Mortgage markets not rallying much this morning but prices have improved, at 10:00 the 10 yr note at 1.58% a new record low.