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Market Updates

Unemployment rate remains at 4.9%

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The U.S. economy lost 199,000 jobs in September after shedding a revised 84,000 jobs in August. This has the unemployment rate at 4.9%. The September survey did NOT capture the full effects of the terrorist attacks, as the survey was conducted during the week of September 10th. Economists were expecting a much lower number of job losses near 112,000.

A separate household survey, which the government uses to figure the unemployment rate, showed a gain of 788,000 jobs in September, which comes close to reversing the 986,000 jobs lost in the month of August.

Average hourly earnings rose just 0.2% for September.

Stock futures edge lower

Since the unemployment numbers were announced, stock futures have been mixed to lower. S&P 500 futures (sp01z) are down 1.5 points to 1,073, NASDAQ futures (nd01z) are lower by 11 points to 1,253 and Dow futures (dj01z) are down 18 points to 9,070. Fair value for the S&P 500 today is $2.75. HL Camp & Company has their computers set for program buying at $4.02 and set for program selling at $1.08.

Bond YIELD action

Yesterday's surprise $6 billion auction of 10-year notes is having little effect on bonds here this morning. YIELDS for the 5, 10 and 30-year are all near unchanged levels, so we're not getting much of a reaction to the unemployment numbers from the bond market at this time.

In yesterday's market wrap on premierinvestor.net we talked about refinancing mortgages based on the point and figure chart of the 10-year YIELD ($TNX.X) and how that can affect home mortgage rates. We're watching the 10-year YIELD closely this morning as it relates to a potential short/put opportunity for Fannie Mae (NYSE:FNM). Should we see much of a YIELD move higher in the 10- year and/or 30-year near-term, we're thinking that bond YIELDS in the longer end of the bond market may have found their bottom. Should this be the case, then some lenders may be susceptible to some downside action.

Jeff Bailey
Senior Market Technician
Option Investor

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