Commentary: New day - same old story.
The dramatically shifting headlines from Europe once again trumped all other news.
The Labor Department reported earlier this morning the national jobless rate unexpectedly dipped to 9.0% in October - even as the headline jobs number posted a gain of 80,000 - well below forecasts calling for a gain of 95,000 or more. The August and September count of new job creation was revised higher by 102,000.
The Labor Department conducts two separate surveys to derive these - one survey of 40,000 business establishments to generate the nonfarm payroll report - and a second survey of 60,000 households to produce the data from which the national jobless rate is derived. The household report is believed to provide a more accurate estimate of labor market conditions -- since it reflects job creation by small businesses while the establishment report is heavily weighted toward existing companies with 500 or more employees. I suspect the preceding is every close to being way more than you ever wanted to know about the mechanics behind the components of the monthly nonfarm payroll report - but I hope you agree it is a useful base to understand how it is possible for the national jobless rate to fall while headline payrolls post a barely positive gain during the same reporting period.
After an initial swoon created by the surprising dip in the national jobless rate - investors once again stormed into the mortgage market as world financial leaders failed to agree on the role to be played by the International Monetary Fund as the battle to resolve the European debt crisis continues to rage.
Rumors are swirling that Greek Prime Minister Papandreou will survive a confidence vote to be cast by the Greek parliament later today - but only because he has quietly stuck a deal with ministers to voluntarily hand power to a coalition government sometime early next week. The potential power shift at this late date has once again driven capital from around the globe into the relative safe haven of dollar denominated assets like Treasury debt obligations and mortgage-backed securities - a condition currently supporting mortgage interest rates at levels that would not likely prevail otherwise.
Looking ahead to next week - Uncle Sam will be in the credit markets looking to borrow a total of $72 billion in the form of 3- and 10-year notes together with an offering of 30-year bonds. $32 billion of 3-year notes will go on the auction block on Tuesday followed by $24 billion of 10-year notes on Wednesday. The auction series will round out with $16 billion of 30-year bonds on Thursday. If the European debt drama is still at full throttle (a high probability assumption) - the coming U.S. debt supply will not likely have much impact on the current level of mortgage interest rates.
The balance of the week will see nothing but a few second tier economic reports hit the news wire before traders close the doors on Friday in observance of the Veteran's Day Holiday.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
