Fed governor Tarullo testified on the situation in Europe; US jobless claims;European confidence

· US jobless claims - Initial jobless claims for the week of May 15 were unexpectedly high, rising 25,000 to 471,000 (consensus and JPMorgan 440,000). The 4-week moving average is now 453,500. The Labor Department said that there were no special factors to account for the rise. Continuing claims for the prior week declined 40,000 from an upward revised level to 4.625 mn and the insured unemployment rate held at 3.6%. This report is for the week of the May labor market survey and the rise in claims will tend to dampen forecasts of May private-sector employment growth.  Mellman 

· Philadelphia Fed was inline today (came in 21.4 vs. the St 21.3). 

· Leading Economic Indicators fell 0.1% vs. the St looking for a 0.2% increase. 

· European confidence - One major issue for the Euro area economic outlook is whether recent events, such as assets price falls in financial markets and sovereign stresses more generally, will weigh on consumer and business confidence in the region. The first sentiment survey for May saw consumer confidence falling from -15.0 in April to -17.5 in May.  Fuzesi  

· Fed governor Tarullo testified before the House today on the situation in Europe – this is the first time a Fed official has responded to the events occurring across the Atlantic.  Nothing too groundbreaking – says the US can’t do much to help Europe solve this crisis; notes that a steep downturn in European growth would impact the US recovery; says US banks don’t have a ton of exposure to European peripheral sovereign debt.  http://www.federalreserve.gov/newsevents/testimony/tarullo20100520a.htm