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  • October Employment Report

    -- OCTOBER PAYROLLS RISE 171,000, JOBLESS RATE RISES TO 7.9%   

    -- PRIVATE PAYROLLS RISE BY 184,000, GOVERNMENT JOBS DROP 13,000

    -- SEPT. PAYROLLS RISE 148,000, REVISED FROM 114,000 GAIN

    -- HOUSEHOLD MEASURE OF U.S. EMPLOYMENT INCREASES BY 410,000

    -- REVISIONS ADDED COMBINED 84,000 JOBS FOR SEPT., AUGUST

    -- Oct JOBLESS RATE AT 7.876% VS 7.796% PRIOR MONTH

    -- FACTORY JOBS RISE 13,000, CONSTRUCTION CLIMBS 17,000

    -- OCT. AVERAGE HOURLY EARNINGS FOR ALL U.S. WORKERS UNCHANGED

    -- participation rate gains to 63.8% vs. 63.6%

    -- U6 drops to 14.6% vs. 14.7%

     

    Pretty strong headline, plus upward revisions to last month’s numbers.  10yr up 4bps to 1.81 and a small reaction in equities.  Although strong, the report is actually a bit of a mixed bag for mortgage rates.  Typically, a strong job print is bearish for mortgage bonds.  Today, however, our downside is limited as this is good news for Obama.  The market sees an Obama win as a positive for the low rate environment we’ve been working in and most believe 10yr rates will fall another 10bps if he wins.   Romney, on the other hand,  would be much more hawkish and unlikely to continue the Fed policy of quantitative easing, pushing rates up ~20bps immediately.  According to Nate Silver’s FiveThirtyEight Forecast, Obama’s chance of winning is currently at 80.9% and undoubtedly rising after today’s jobs data.  Fannie 3s were initially off 8 tics after the number, but have since stabilized and been met with buying – now down just 4.

    Nov 2 2012