Good Morning on this Friday,

Today is jobs report day, the most important economic data set of the month that can create enormous volatility. If volatility is your thing, this one didn’t disappoint. The market was stunned with an incredibly positive unemployment report. The 10-yr is at .93 (.25 worse than Monday and mortgage bonds are off 27bps). The consensus was for a drop of 8.5 million jobs lost and instead 2.5 million people went back to work. There is huge disconnect between the weekly jobless claims and this payroll report. Dan Rawitch shared: that there are reasons the two reports do not always sync up entirely, there is almost always a high level of congruency in the two. Yesterday we learned that over 2 million more people filed for unemployment which brings the total well over 40 million, yet somehow non-farm payrolls grew?? Whatever the reason, truth of lye, the bond market barfed. We knew we lost support in treasuries over the last couple of days.  Going forward, it seems we just may hold where we are now, but it is a bit too early to bet on this. As you know, when markets move fast, they always move too much and for too long before correcting. One promise I will make you is that this will not last and within the next few weeks, we will see improvement. I am not saying it will take that long but I am saying that it could.

While we selfishly want rates to be as low as possible, the greater good is certainly for the economy to rebound and for rates to normalize. Let’s hope this is what today’s data is telling us today.

Two great graphs from the WSJ. The first is on the trajectory of rates as of today. The other, which is far more telling, is where the challenge in home sales will come from. It is not a concern over rates, or even employment, but for sale inventory. I think prices continue to increase in the short term as a result.

Enjoy the weekend, please stay safe and healthy and first, make today great!