Good Friday AM before a holiday weekend,
The only thing to be said today is, the holy grail of economic data, the jobs report, was weak but didn’t derail markets from pushing rates up a little more. It is destiny for the moment although I don’t think the report gives the Fed any momentum to taper or raise rates. The lower unemployment rate (forget about job creation being dismal) was due to less people looking for work not an abundance of workers. There is a big difference, the below commentary is as good as any right now. In the end, you cannot fight the tape. There is a lot of shorts in the Treasury and Mortgage bond market which will require covering soon. I would expect some improvement then. Next week is a new opportunity, that’s the silver lining.
At 8:30 am ET the Sept employment report, long anticipated, the initial knee jerk reaction sent the 10 yr. briefly to 1.60%, lasted five minutes before the note dropped back to unchanged; MBS prices down 9 bps rebounded to +3 bps. The initial reaction to Sept employment was slower job growth; non-farm jobs were expected +475K, as reported +194K, private jobs thought to be +445K up just 317K and August private jobs revised from 243K to 332K. those numbers caused the selling; the reversal came once traders focused on the unemployment rate that was expected at 5.1% from 5.2% in August; the unemployment rate fell to 4.8%. Sept average hourly earnings forecast to be +0.4% increased to +0.6%; August earnings originally reported +0.6% revised lower to +0.4%. On a yr./yr. basis average hourly earnings expected at +4.6%, as reported +4.6% but August yr./yr. originally 4.3% revised lower to 4.0%.
Please remain safe and healthy, enjoy the holiday weekend and first make today great.