There was a clear bullish bias in the futures market early this morning that defied the bearish tenor of most of the leading headlines.

To be exact, we saw it reported that German Chancellor Merkel acknowledged the solution to the eurozone debt crisis will take years and that it is pointless to consider a eurobond.  There was an indication that overnight borrowing from the ECB was the highest it has been since March.  And a top official in China's foreign ministry averred that China is unlikely to ride to Europe's rescue with a big portion of its foreign exchange reserves.

Processing that information, it struck us that the S&P futures were up, not down, 14 points.

The prevailing rationale for the favorable disposition was that there was an optimistic spirit ahead of the November employment report.  That may be, yet it seems to be a reach considering that same optimistic spirit should have been present yesterday when the S&P 500 declined 0.2%.

Our thinking is that the recent reformation in the eurozone bond markets has acted as a girding influence.  To that point, Italy and Spain have both seen the yield on their 10-year notes drop by more than 80 basis points since last week to 6.50% and 5.52%, respectively. 

That's not to say those are cheap borrowing rates, yet the improvement has fostered a burgeoning sense of confidence in the idea that policymakers will not allow these credit markets to crater to the fiscal point of no return.

On a related note, there is a Bloomberg.com article today addressing a working idea that would allow national central banks to recycle funds through the IMF that could ultimately be lent out to troubled countries in the eurozone.  This is a plan that has been talked about before, so today's report simply reinforces the notion that a discussion of extraordinary measures is at least under consideration, which is more reassuring than the thought that no such discussions are taking place.

The market's thinking about possible support measures could change, because the market's experience thus far in considering the eurozone debt crisis is that little can be taken for granted when it comes to reported policy solutions.  In any event, the improvement seen this week is fueling a lot of hope ahead of the December 8-9 EU Summit.

Shifting gears, the November employment report did not necessarily go the way of the ADP Employment Change report seen earlier this week in that the headline payrolls number was not much higher than expected.  In fact, it was basically right in-line with the Briefing.com consensus estimate with a 120,000 increase in nonfarm payrolls and a 140,000 increase in private payrolls.

There were upward revisions to nonfarm payrolls for September (to 210,000 from 158,000) and October (to 100,000 from 80,000).

The real surprise was reserved for the unemployment rate, which dropped to 8.6% from 9.0%.  That was partly a function of a drop in the labor force participation rate (to 64.0% from 64.2%), but it is an indication that might stoke renewed job searching interest among discouraged workers.   It is possible, then, that the rate might jump next month should more workers return to the labor force.

The number of long-term unemployed (those jobless for 27 weeks or more) actually rose to 43.0% of the unemployed from 42.4% in October.

Other metrics showed the average workweek held steady at 34.3 hours as expected and that hourly earnings declined 0.1%.  The latter was below the Briefing.com consensus estimate that called for a 0.2% increase and will be viewed by economists as a possible restraint on consumer spending in December.

The November employment was not as strong as had been hoped, but it was certainly not as bad as some have grown accustomed to fearing.  The good news is that there is job growth.  The frustrating news is that the growth in payrolls and in average hourly earnings isn't robust enough to get the economy growing above potential.

The S&P futures are little changed since the release of the employment report.  They are currently up 14 points and are trading 1.1% above fair value, as the employment data and the action in the eurozone bond markets are being viewed as good enough to hold the bullish line for the time being.

--Patrick J. O'Hare, Briefing.com

Patrick J. O'Hare is Chief Market Analyst for Briefing Research, Briefing.com's institutional research service. To request a free trial, please email researchsales@briefing.com.