Jobs Report Features More Questions Than Answers -- Again

October 5, 2012 04:45 AM

What Traders are Talking About:

* More questions than answers in jobs report -- again. The U.S. economy added 114,000 non-farm payrolls in September, while the unemployment rate dropped to 7.8%. The jobs growth was right in line with expectations, while the drop in the unemployment rate was unexpected. The Labor Department revised up July and August non-farn payrolls a combined 86,000 from last month, which helps explain some of the drop in unemployment, but there are still more questions than answers in the data.

The long and short of it: Markets have reacted to the jobs data with confusion as there is something for both sides in this jobs report.

* Waiting on Oct. 11. Corn and soybean futures are making a case that short-term lows are in place following recent, sharp price pullbacks. The corn market was aided by last Friday's bullish Quarterly Grain Stocks Report, while soybeans are getting a boost from bargain buying and Chinese demand, signaling prices have fallen "far enough." But many traders are still waiting on USDA's October crop estimates. Informa Economics will release its October crop estimates this morning.

The long and short of it: Many traders are likely to wait on USDA's Crop Production and Supply & Demand Reports next Thursday before making major position changes. If that indeed is the case, choppy price action is likely into next Thursday.

* No bailout for Spain? Most investors feel bailout funding for Spain is a matter of when, not if. But according to Spain's finance minister, the country doesn't need a bailout. Backing up his comment, the International Monetary Fund says Spain has not asked for emergency funding from the group and a senior EU official says a Spanish bailout is "not imminent." Still, traders assume it's only a matter of time until Spain requests a bailout.

The long and short of it: Expectations for a Spanish bailout is calming some investor concerns, suggesting the sooner Spain requests a bailout, the better for market sentiment.


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