Oct 22. Today’s delayed Payroll Report; NFP expected 180k
–Yields backed up slightly with tens up a couple of bps to 2.61. Activity was sparse at best, though there was a large buyer of EDZ3 up to 9975.5 as the 3 month Libor setting dribbles lower (just under 24 bps). Open interest increased nearly 6k.
–The long awaited payroll report is released today, expected to show a gain of 180k. I’m of the opinion that even if hiring shows some momentum, the gov’t shutdown likely squelched it, along with the fanfare of the Obamacare roll out.
–In the absence of interest rate trading activity, I looked at grain markets over the past couple of years as crop yields are expected to be large. Corn trades nearly half the price of 2012’s high. Beans and wheat are also near the lower end of the past two year range. Farm income is declining, according to a slightly dated KC Fed report. http://www.kansascityfed.org/publicat/research/indicatorsdata/agcredit/AGCR2Q13.pdf Will farmland prices be able to sustain their gains? In Q2 2013, irrigated croplands jumped 25% in price, but income should again become a determining factor. (Other factors noted in the KC report were low finance rates and lack of competitive investments). In spite of QE, weaker grain prices are likely a disinflationary influence.
–(Reuters) – “The federal judge overseeing Detroit’s bankruptcy filing called the city’s pension funds “unsecured creditors” and stated that any special protections for them would violate federal bankruptcy law.” From Breitbart: “In a Sunday morning interview with WGN Radio, Illinois’ Senate President John Cullerton said the state’s staggering $100 billion unfunded pension liability is not a “crisis.” …“People really misunderstand the nature of this whole problem; quite frankly, I don’t think you can use the word ‘crisis’ at the state level,” Cullerton said.” http://www.breitbart.com/Big-Government/2013/10/21/Illinois-Senate-Pres-100-Bil-Unfunded-State-Pension-Liability-Not-a-Crisis Amazing. I’m sure those hoping to receive pensions in IL are happy to know that they too, are unsecured creditors.
