Daily Commentary by Larry Baer: The Labor Department
announced earlier this morning that employers added 114,000 workers to their
payrolls last month - matching almost exactly the number most economists had
been projecting. Labor Department
officials also announced they had under counted employment gains in July and
August by a combined 86,000.
Most economists had
been anticipating the national jobless rate, a value derived by a separate
telephone survey of American households, would tick higher to 8.2% from the
August mark of 8.1% -- but government data wonks said those expectations were
much too pessimistic.
According to Labor
Department statisticians the biggest single monthly increase in household
employment since 1983 sent the national jobless rate tumbling to 7.8%. According to the government's household
survey numbers -- 873,000 Americans said they either had a job or found a job
last month - with roughly 582,000 of these people saying they were working
part-time even though they wanted full-time work. The 873,000 employment gain in September
followed an 119,000 decline in the household survey number in August. The Labor Department said the household
employment survey data can be volatile on a month-over-month basis. Labor Secretary Hilda Solis was quick to
assure the press and market participants any notion the jobless rate was
manipulated for political purpose was absolutely "ludicrous."
The coming holiday
shortened week will feature a three-day, $66 billion Treasury debt auction of
3-and 10-year notes and a 30-year bond component. The macro-economic calendar will be thinly
populated with Thursday's weekly jobless claims number and Friday's September
Producer Price Index representing the only top-tier reports investors will
consider.
Once
again trading activity in the stock markets will likely exert the largest
influence on the trend trajectory of mortgage interest rates over next week's
four trading sessions. Higher stock
prices will tend to put some modest - but nonetheless noticeable - upward
pressure on rates while lower stock prices will probably prove supportive of
steady to perhaps fractionally lower mortgage interest rates.
My timing models are
suggesting the period from Thursday, October 11th through Monday,
October 15th carries a high probability of representing a key turning
point for stocks.
For what is worth -
Friday, October 19th will mark the 25th anniversary of
the 1987 stock market crash - a nasty collapse that saw the Dow give up roughly
39% of its value in a single month. If a
correction of that magnitude were to occur this time around -- the Dow would
fall from its current level of roughly 13,500 to something in the neighborhood
of 8,200. I'm not suggesting such a
thing is probable over the course of the coming month - but it is worth at
least noting that it has happened before.
In any case, a hard downward correction in the stock markets, should it
occur, will almost certainly prove supportive of steady to perhaps fractionally
lower mortgage interest rates. That is
the good news. The bad news is those
lower rates will not likely be met with increased mortgage demand - especially
on the existing and new home purchase loan side of the ledger. Heads up.
THE
MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
