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The stock market has showed some bullish swagger the last two sessions as the S&P 500 has increased 1.9% since Monday's close. Notably, trading volume has tapered off the last two sessions, so questions remain as to whether the move is simply a bounce from oversold conditions or the start of a new leg higher for the stock market. It has helped some that interest rates have settled down. The yield on the 10-yr note sits at 2.50% this morning versus 2.66% at its high on Monday. Furthermore, the liquidity angst surrounding China has abated, but we can't confidently say it has been erased. Economic data have been mixed, the strongest performers so far this week (and month) have been the defensive-oriented sectors, volatility is elevated, industrial metals have been weak, and the People's Bank of China remains coy about its efforts to provide liquidity. The market seems to have calmed down some, though, on the back of Fedspeak that has leaned in the direction of saying the market overreacted to Fed Chairman Bernanke's remarks on the tapering timeline. The door is open today for further reassurances (should they be given) since New York Fed President Dudley will be speaking today at 10:00 a.m. ET. Fed Governor Powell and Atlanta Fed President Lockhart will also be giving speeches today at 10:30 a.m. and 12:30 p.m. ET, respectively. Briefly, initial claims for the week ending June 22 fell by 9,000 to 346,000 (Briefing.com consensus 345,000). That is fairly consistent with recent levels that suggest labor market conditions are getting better, but are far from robust. Claims around the 350,000 level have correlated with nonfarm payroll gains below 200,000. Income, meanwhile, increased a stronger-than-expected 0.5% (Briefing.com consensus +0.2%) while spending was a bit softer than expected, up 0.3% (Briefing.com consensus +0.4%). It was a sea of green across Asia as all of the major bourses, aside from China's Shanghai Composite (-0.1%), ended in positive territory. Elsewhere, Germany's unemployment remained at 6.8% (6.9% consensus) after the number of unemployed declined by 12,000 (8,000 expected, 17,000 prior). In Asia, Japan's Nikkei rallied 3.0% while China's Shanghai Composite closed little changed. The People's Bank of China refrained from injecting liquidity into the banking system, but said funds will be provided to large lenders.

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10. QE MAY INCREASE IF ECONOMY SLOWS 11. Pending home sales for May rose 6.7%, which was better than the 1.5% increase forecast by the Briefing.com consensus. 12. Pending home sales jumped in May to reach a six-year high, the National Association of Realtors said Thursday. The NAR's pending home sales index climbed 6.7% to 112.3 in May, from a downwardly revised 105.2 (from 106.0) in April. The index was up 12.1% from May 2012 levels. The NAR said the rise in mortgage rates has prompted some would-be buyers to move. "Even with limited choices, it appears some of the rise in contract signings could be from buyers wanting to take advantage of current affordability conditions before mortgage interest rates move higher,"

BLOOMBERG.COM 13. U.S. stocks rose, sending the Standard & Poors 500 Index to its biggest three -day rally since January, as reports showed consumer spending rebounded in May and fewer Americans filed claims for unemployment last week. 14. The data continues to show that the economy is growing at a very slow pace and that unemployment is improving at a very slow pace, 15. It means the likelihood that the Federal Reserve changing course on its monetary policy this year is very low and that further solidifies the case that last weeks correction was emotionally driven and an overreaction. 16. Despite this months decline, the S&P 500 is up 3 percent for the quarter and has rallied 13 percent for 2013. 17. Household purchases, which account for about 70 percent of the economy, rose 0.3 percent after a 0.3 percent decline the prior month that was the biggest since September 2009, Commerce Department figures showed today in Washington. Incomes advanced 0.5 percent, more than projected. 18. Jobless claims decreased by 9,000 to 346,000 in the week ended June 22 from a revised 355,000 the prior period, 19. Federal Reserve Bank of New York President William C. Dudley said the central bank may prolong its asset-purchase program if the economys performance fails to meet the Feds forecasts. Dudley also said any decision to reduce the pace of asset purchases wouldnt represent a withdrawal of stimulus, and that an increase in the Feds benchmark interest rate is very likely to be a long way off. A strong case can be made that the pace of growth will pick up notably in 2014

20. Consumer spending in the U.S. rebounded in May following the largest drop in more than three years, a sign the biggest part of the economy will underpin growth this quarter. 21. Household purchases, which account for about 70 percent of the economy, rose 0.3 percent after a 0.3 percent decline the prior month that was the biggest since September 2009 22. The report may help ease concern about the outlook for the economic expansion after data yesterday showed household purchases rose at a slower pace than previously estimated in the first quarter. Rising home prices and an improving job market, combined with faster income gains, may help to accelerate spending in the last six months of 2013. 23. Smaller reductions in headcounts indicate employers are confident enough that demand will be sustained as the housing market improves and consumers grow more optimistic. Bigger gains in sales may encourage companies to step up hiring and help reduce an unemployment rate theFederal Reserve says remains elevated. 24. The yen fell against all 16 of its major peers as speculation the Federal Reserve doesnt consider the economic recovery strong enough to start removing stimulus damped demand for the relative safety of Japans currency. 25. Youve had a consistent discussion from many world leaders that Fed tapering is not around the corner, and the Fed wants to get that message out as well, Douglas Borthwick, a managing director and head of foreign exchange at Chapdelaine FX in New York, said in a telephone interview. The last couple of days have given position takers time for the dust to clear and figure out that the yen will weaken going forward.