Market Brief and Jobs report strategy

38bp gain on our benchmark Fannie Mae 6% mbs. to close the day at $101.72. Lower energy costs, lower than expected drop in gasoline and crude inventories, and a higher than expected Jobless claims number sent the stock market on a free fall with the Dow diving 344 points to close at 11,188, the NASDAQ dropped 74 points to close at 2,259 and the broader S&P 500 Index lost 38 points to close at 1,236.

This flocking away from stocks obviously bode well for us and investors rushed to the safety of the bond market. I see the jobs numbers being better than expected which should tell us that bonds won't fare well and you would expect a recommendation to lock here. (You would if you've been paying attention the last several months...) But here's your curve ball, the "Birth/Death Ratio" which estimates the number of new business created and dissolved uses averages to determine the net for changes in the number of businesses operating. It then figures how many new jobs that would create. In other words to put it mildly it's a stab, at best, based on averages. The economy is in a sharp downtrend so previous average will surely overstate the number of new jobs in the current market. I expect continued negative revisions for the past two months which should balance out the two and make that a wash as far as impact on bonds goes. Unemployment, currently at 5.7%, is most likely going to swell higher and that will have a downward push on the mortgage interest rates. Considering we poked through the ceiling of resistance at the 200 day moving average and continued higher through the next resistance level, we may be have those flipped to a floor of support if things go as I've stated tomorrow. That should make for lower interest rates over the next week or so at least, pending any uunforeseen shake up, and possibly longer. So for now, tentatively I recomend floating because the risk/reward is in your favor.

Check back tomorrow and lets see if I'm right. Go Gamecocks, heading to watch the game but call me tomorrow and I'll gladly help walk you through my thought process!