Daily Commentary by Larry Baer: Earlier this morning the Labor Department
reported initial jobless claims dropped by 9,000 to a seasonally adjusted
363,000 last week. The number of filings was not affected by Hurricane
Sandy, though it is a virtual certainty the data will be skewed by the effects
of the storm in upcoming weeks.
In a separate report
the Institute for Supply Management said its private Manufacturing Index posted
a stronger than expected reading, show the pace of growth in the manufacturing
sector picked up modestly in October as new orders improved, though a measure
of employment slowed.
The ISM data was
consistent with a report released this morning by the Bureau of Labor
Statistics that revealed U.S.
nonfarm productivity increased at a modest pace in the third quarter.
Productivity, which measures hourly output per worker, increased at a 1.9%
annual rate which sharply outpaced a healthy increase in hours worked. In
a nutshell, the Q3 Productivity and Unit Labor Cost statistics did nothing more
than highlight the existence of a highly productive and attractively
inexpensive labor force - right here in the United
States. The virtual complete absence of
inflation pressures from the labor sector continue to support the prospects for
steady to perhaps fractionally lower mortgage interest rates ahead.
The investment
community will spend the balance of the day putting the finishing touches on
their risk management strategies in front of tomorrow's much anticipated
October nonfarm payroll report. A headline payroll gain falling in the
immediate neighborhood of 130,000 or less together with a jobless rate of 7.9%
or less will probably produce little noticeable reaction in terms of the trend
trajectory of mortgage interest rates. In the unlikely event the headline
payroll number posts an improvement in excess of 130,000 new jobs and/or the
jobless rate falls below 7.8% -- look for investors to move aggressively to
push mortgage interest rates higher before the end of the day.
THE
MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
