Today’s Spotlight Market
The market?s reaction to Friday?s employment figures was mixed, with strong gains seen in equity indices and the U.S. Dollar, while commodity prices — especially precious metals and energies — fell sharply. U.S. treasuries were mixed, with rising yields in the short-end of the curve, while long-term bond yields fell, which sent the 2-Yr/30-Yr yield curve to 2.57%.?
Fundamentals
The employment picture turned a bit brighter in September, as the Labor Department reported 248,000 jobs were created. Possibly even more important was the upward revision of the August employment totals to 180,000 jobs created, which is up 38,000 from what was originally reported. The unemployment rate also declined, breaching the 6% barrier to 5.9%, which is the lowest level since mid-2008. Before feeling too optimistic about Friday?sdata it should be noted that the labor participation rate fell to 62.7% from 62.8%, which is near three-decade lows.? As discussed in Friday?s Xpresso, a broader gauge of U.S. employment is the so-called U6 figure, which includes part-time employment as well as discouraged workers. Here the rate fell 0.2% to 11.8%. Average hourly earnings fell by $0.01 to $24.53, which keeps one of the major concerns of Federal Reserve officials still on the table, as wage inflation remains muted. While the September employment report was solid, it is likely to do little to alter the market?s beliefs that the Fed will begin to raise interest rates sometime in mid-2015.?
Technical Notes
Looking at the weekly continuation chart for the U.S. Dollar Index futures, we notice the seemingly ?parabolic? rise in the index, which has risen to highs not seen since the summer of 2010. It appears that the index has broken out from the consolidation phase drawn from the 2005 highs and the 2008 lows. The 14-day RSI has moved well into over overbought territory, with a current reading of 82.95. The next resistance level is seen at the June 2010 high of 88.80, with support found at 84.78.
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