The Dow is currently trading at 13,632 higher by 200 pts over last week The S&P 500 is trading higher at 1,466. Gold is trading at $1,783 an ounce, while oil futures at $89.33 a barrel. Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $4.05/Gal.
Yields on 10-year notes, which move inversely to prices, are trading at 1.71%. 30-year bond yields are trading at 2.95%. Mortgages or FNMA 3.5% MBS (Mortgage Backed Security) is currently at 106.94. Basically each percent change in the price of the security translates to the price (or points paid or credited) of the mortgage rate.
In economic news this week; Construction spending fell 0.6% for the second month in August. It was a mixed bag for auto makers in September as Chrysler reported some of its best sales increases in years, while Ford and General Motors posted results that were largely flat. Factory orders slumped 5.2% in August for the second drop in three months.
The big news is the employment report: The U.S. unemployment rate fell to 7.8% last month from 8.1% in August, its lowest level in more than 3½ years as the economy continued to add 114,000 jobs. The previous jobs number was revised higher at 148,000. So the number of new jobs created actually fell last month.
Today’s report is the first since the Fed’s decision to commence an ambitious stimulus program, buying $40 billion a month of mortgage-backed securities until the U.S. job market substantially improves. The latest numbers offer some good news with the falling unemployment rate but also suggests that job creation, while steady, remains slower than the Fed would like.
Now, I will admit that I am a conspiracy theorist. Not only does it make for good reading, but it makes you think; could it be possible? The figures are also the next-to-last snapshot of the labor market before the November election. October’s employment numbers are due out only four days ahead of the vote—possibly too late to sway many ballots. So how does the unemployment rate fall to 7.8% last month from 8.1% when the same lackluster new jobs created actually fell? The last time the unemployment rate was below 8% was in the same month Obama took office in January 2009. I’m nor the only one calling it a conspiracy. Jack Welch, former CEO at General Electric, took to Twitter this morning to voice his displeasure with the jobs report. He Tweeted; “Unbelievable jobs numbers..these Chicago guys will do anything..can’t debate so change numbers”.
One would assume Welch’s critique centers around the big jump seen in the household survey, which showed 873,000 people found jobs last month, the largest increase since January 2003. That played a big role in dragging down the unemployment rate. Now do I actually think the report was “rigged” not really but within our governmant anything’s possible.
The number of people filing for unemployment benefits bounced higher last week, underscoring the slow pace of job creation. Initial jobless claims climbed to 367,000 last week, compared to an upwardly 363,000 in the prior week. Soooo more people are filing for unemployment but the unemployment rate dropped, hmmm… By the time this report gets revised the election will be over and we’ll have a new President.