Morning Report - Jobs Day

Vital Statistics:

	Last	Change	Percent
S&P Futures	1418.5	5.5	0.39%
Eurostoxx Index	2593.6	-9.8	-0.38%
Oil (WTI)	86.71	0.5	0.52%
LIBOR	0.31	-0.001	-0.32%
US Dollar Index (DXY)	80.48	0.225	0.28%
10 Year Govt Bond Yield	1.62%	0.03%
RPX Composite Real Estate Index	190.9	-0.1

Markets are higher after a better-than expected jobs report.  Nonfarm payrolls increased by 146k in November vs an expectation of 85k.  October was revised down from 171k to 138k.  The unemployment rate dropped from 7.9% to 7.7%, but this was driven by a drop in the labor force participation rate from 63.8% to 63.6%. Surprisingly, Sandy didn't appear to have much of an impact on the numbers. Still the headline numbers look good, and that is driving the index futures higher.  Feels like the Street was leaning short going into the numbers.  Bonds are down a point and MBS are down 7 ticks.

Small Business Hiring Plans hit post-recession low. Hiring plans are as low as they were in late 2008.  Resolution of the election "uncertainty" doesn't seem to be having an effect, at least not yet.  We'll see if resolving the fiscal cliff changes anything; my guess is that it won't.

The National Association of Homebuilders added 76 MSAs to their Improving Markets Index. The recent housing strength is spreading across the country. They note that "overly tight mortgage lending standards" are the one thing that is holding back progress.

HUD Secretary Shaun Donovan told the Senate Banking Committee that FHA is committed to selling at least 10,000 distressed loans per quarter over the next year, and it will raise the annual insurance premium paid by borrowers by 10 basis points.

If the Fed adds another Treasury-buying program to compensate for the end of Operation Twist, they will almost certainly have to re-write their exit plan.  The sheer size of the numbers (estimates are that the Fed will have to sell $2 - $3 trillion worth of assets over several years.  If the Fed attempts to dump mortgage backed securities en-masse, it will exacerbate the increase in borrowing rates that will already be taking place.