Daily Commentary by Larry Baer: First-time
claims for unemployment benefits unexpectedly fell to their lowest level since
February 2008, but the government said one-time factors likely caused the steep
30,000 weekly drop in the claims figure.
A Labor Department spokesperson said seasonal factors had predicted a
very large increase for jobless claims last week, which he said would be
typical for the first week of the calendar quarter. Unadjusted claims did rise, but far less than
expected, resulting in the sharp drop in the seasonally adjusted figure. The prior week's figure was revised up to reflect
2,000 more new jobless benefit claims than had been previously reported.
Wednesday's Beige
Book release from the Fed (a report, named for the color of its cover, which is
a compilation of economic data from all 12 Federal Reserve Districts) showed
modest improvements in regional job markets in 10 of the 12 Federal Reserve Districts.
The moral of this
story is that while the labor sector of the economy is undoubtedly showing
modest improvement -- the large drop in the September national jobless rate and
today's initial jobless claims figures will likely prove to be statistical
aberrations - probably resulting in an overstatement of the apparent
acceleration for job creation in the economy.
In other words - one month -- or for that matter one week of outsized
employment gains -- does not make a trend.
The majority of mortgage
investors have evidently chosen to discount the recent upbeat news from the
labor sector -- judging by the rather muted impact the surprisingly strong data
has created on the current trend trajectory of mortgage interest rates.
Another test of the level
of certainty credit market participants are assigning to recent news of major
improvements in the pace of job creation here in the United States will come
later today when the Treasury Department drops the final gavel on the sale of
$13 billion worth of 30-year bonds at 1:00 p.m. ET. This week's 3- and 10-year notes auctions
drew stronger-than-expected bids from nervous investors piling into safe haven
assets among increasing signs of economic weakness here and aboard.
It's a close call -
but it appears to me from a technical perspective demand for today's 30-year
bond offering will be decent - though not outstanding. If my assessment proves accurate, this event
will likely have little, if any noticeable impact on the current trend
trajectory of mortgage interest rates.
THE
MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
