Dow retreated 68, decliners slightly ahead of advancers & NAZ fell 52. The MLP index fell 2+ to the 112s & the REIT index crawled higher in the 352s. Junk bond funds went up in price & Treasuries were sold. Oil pulled back 1+ to the 37s & gold added 6 to 1952.
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The US ecfonomy added 638K jobs in Oct, pointing to a slowdown in the labor market;s recovery from the coronavirus pandemic as gov relief faded while new cases increased. The Labor Dept's payroll report showed the unemployment rate unexpectedly slid to 6.9% from 7.9%. The forecast called for the report to show that unemployment dropped to 7.7% & the economy added 600K jobs. "That we added more jobs than expected and that the drop in the employment rate this time was not partly due to Americans leaving the labor force are two major pluses," said Robert Frick, a corp economist at the Navy Federal Credit Union. But he added that "on the other hand, the pace of new hires is slowing, more workers are moving into the ranks of the long-term unemployed, and the number of permanently unemployed held steady at 3.7 million." It's the 4th consecutive month that job growth has cooled since employers added a combined 7.5M jobs in May & Jun. US employers made 672K new hires in Sep. There are still about 10M more Americans out of work than there were in Feb before the crisis began. Leisure & hospitality, one of the industries hit hardest by the pandemic, once again led in terms of job growth, with gains of 271K. Food services & drink places accounted for 192K of those gains. Professional & business services increased by 208K & retail added 103K with the biggest gains -- 31K -- taking place in electronics & appliance stores. Construction jumped by 84K
US economy added 638,000 jobs in October as unemployment falls to 6.9%
Mortgage rates dipped to another record low for the 12th time this year driven by ambiguity surrounding the election outcomes. According to Freddie Mac, the 30-year fixed mortgage averaged 2.78%, a drop of 3 basis points from the previous week. Even though the rates have slumped to record lows once every 4 weeks on average this year, the new slump highlights investors' concerns over political uncertainty. However, mortgage rates tend to be unpredictable in the weeks after presidential elections. Freddie Mac data shows that rates have gone up, down & remained steady since the 2000 election. The contested race saw a steady 30-year fixed-rate mortgage throughout Nov at a range of 7.73-7.79%, followed by a sharp decline with the outcome of the Supreme Court's Bush v. Gore case. Rates moved up after Bush's re-election in 2004, in addition to Pres Trump’s 2016 election & fell both times when Pres Obama seized the nomination. And with potential gridlock among Congress should the GOP retain the Senate & the House maintain Dem control, a hazy outlook on policy could further concern investors. The 10-year Treasury note also fell to 0.778% following the current election, as mortgage rates are pegged to the trajectory of long-term bond yields. The uncertain results of the election have also triggered concern that a near-term stimulus package is unlikely, upping the demand for gov bonds. Despite the unpredictability that has marked 2020, the housing market remains ripe. The consecutive series of low mortgage rates has juiced demand for refinancing.
Mortgage rates hit another record low following election uncertainty
Italy's latest restrictions to try to rein in the coronavirus include a partial lockdown of Lombardy, its richest & most populous region around the financial capital Milan, Prime Minister Giuseppe Conte said. Earlier, the gov published its new package of measures, which toughen up nationwide curbs & divide the country into 3 zones - red, orange & yellow, according to the intensity of the epidemic. The zoning depends on a raft of factors, including local infection rates & hospital occupancy. Restrictions will be calibrated accordingly. In the critically affected red zones people will only be allowed to leave their homes for work, health reasons or emergencies & bars, restaurants & most shops will be closed. However, unlike Italy's national lockdown in the spring, all factories will remain open. Speaking at a news conference to illustrate the package which comes into effect today, Conte said the red zones would comprise the large northern regions of Lombardy & neighbouring Piedmont, along with Calabria in Italy’s southern toe & the tiny alpine region of Valle D'Aosta. Lombardy accounts for around a 6th of Italy's population & more than a 5th of its GDP.
Italy locks down financial capital Milan and much of industrial north
Stocks are not doing much after a spectacular rally this week. After initial selling, some buying trimmed losses. It's time for profit taking. In the absence of major news, stocks could see a little more selling in the PM. Meanwhile the gold bugs are happy with buying in the precious metal.
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