Friday, February 5, 2010

Market UpDate

Friday's bond market has opened fairly flat following this morning's release of January's employment figures. The stock markets are also relatively flat considering the past couple of days with the Dow down 11 points and the Nasdaq up 6 points. The bond market is currently up 2/32, which will likely improve this morning's mortgage rates by approximately .125 of a discount point. However, that change comes more from yesterday's rally than today's news.
The Labor Department gave us today's major news. The monthly Employment report is arguably the most important report we see each month. Ironically, the market reaction has been little, especially when yesterday's usually irrelevant weekly unemployment report helped fuel a major stock sell-off and nice bond rally. It is supposed to be the other way around- monthly report causes significant volatility while the weekly report is a non-factor.
Today's release actually gave us mixed results. The headl ine number was the 9.7% unemployment rate that was well below the 10.0% that was expected. But offsetting that negative news for bonds was the loss of 20,000 jobs when new payrolls were expected to be up 15,000. Also favorable to bonds was a sizable downward revision to December's payroll numbers. It was previously announced last month that 85,000 jobs were lost during December, but today's release revised that loss to 150,000. This means that more jobs were lost during the past two months than many had thought.
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