Kansas Corp

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October 8, 2010 As expected, a lackluster nonfarm number spurs more talk of QE2 being enacted by the Fed, and leads Treasury yields ever lower. Overall nonfarm payrolls came in for a larger than expected 95,000 drop, due largely to the continuing layoffs of temporary census workers, and cutbacks from state and local government employers. While census workers alone accounted for 77,000 of the decline, fiscal deficits around the country are placing additional constraints on the budgets of all levels of government. All is not bad here however, as private payrolls added an additional 64,000 jobs during the month of September. While many are making the point that this number once again came in below expectations, the trend remains softly positive, and one shouldn ’t immediately discount it. Nevertheless, today ’s numbers add fuel to the fire to those who feel that jobs just are being created quickly enough, and the odds of QE2 being enacted sooner rather than later. In a bit of positive news heading in to the long weekend, Alcoa kicked off the unofficial earnings season with stronger than anticipated earnings, prompting the Dow above 11,000 for the first time since the May 6 crash. More QE2 talk and the prospect of additional purchases are driving Treasuries higher. Treasury yields as of 11:45 EST are as follows: 2-year note 0.34%; 3-year note 0.51%; 5-year note 1.08%, 10-year note 2.35%, and the 30-year bond 3.70%.

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