Daily Market Wrap

November 3, 2017

Stocks have ended the day higher, with the Dow, S&P 500, and NASDAQ setting new all-time closing highs. The Dow closed up 22.93 at 23,539.19 and the S&P 500 closed up 7.99 at 2,587.84.  Mortgage Bonds ended the day higher, break through another ceiling of resistance.

The highly anticipated Jobs Reported showed that there were 261,000 jobs created in October, which was lower than market expectations of 325,000.  There were positive revisions to the previous two months, which offset some of the miss in today’s headline figure – August was revised higher by 39,000 from 169,000 to 208,000 and September was also revised higher by 51,000 from -33,000 to a positive 18,000, for a combined two month revision of 90,000 jobs.

Average Hourly earnings dropped from 2.7% to 2.4%, which shows decreasing wage pressured inflation…this metric helped Bonds.

There are actually two different surveys within the Jobs Report – the Business Survey, where the headline jobs figure is derived from and the Household Survey, where the Unemployment Rate comes from.  There is a job creation component within the Household Survey as well, which is very volatile.  And after a wild spike of 906,000 jobs in September (which was literally a polar opposite of the job losses showed in the Business Survey), the Household Survey showed a loss of 484,000 jobs in October.  However, because the labor force shrunk by 765,000, the Unemployment Rate improved from 4.2% to 4.1%.  The all in U6 Unemployment Rate dropped from 8.3% to 7.9%, which matches the low from December 2006.

Economic Data

Jobs Report: Actual = 261,000; Consensus = 325,000; Prior = 18,000

Upcoming Events

Next week is a very quiet economic news week.  There will be a 10 and 30-year Bond Auction, which could impact the markets, but the Charts and technical analysis will likely drive market direction.

Technical Picture

Mortgage Bonds have broken above the 25-day Moving Average and are now trading just beneath the 100-day Moving Average – Bonds have taken out several ceilings of resistance over the last few days, which is a positive sign.  The 10-year Treasury Note Yield has broken beneath its 25-day Moving Average and now has the 200-day Moving Average in its sights.

Position

Floating