Friday’s bond market has opened in positive territory following the release of weaker than expected employment numbers. The stock markets are showing losses after the release, but by a far less margin than we would expect. The Dow is currently down 23 points while the Nasdaq is showing a loss of 3 points. The bond market is currently up 8/32, which should improve this morning’s mortgage rates by approximately .375 of a discount point from yesterday’s morning pricing.
The Labor Department said that the U.S. unemployment rate rose 0.2% last month to 9.8% when analysts were expecting no change from October’s rate. They also reported that 39,000 new jobs were added to the economy last month, falling well short of the 130,000 that were expected. And to complete the trifecta, average earnings remained unchanged compared to the 0.1% increase that was forecasted.
This is great news for the bond market and mortgage rates. At leas t it is supposed to be. As I addressed yesterday, these weak numbers did not come as a surprise. What is surprising is the relatively calm reaction to them. I would have expected a reversal of Wednesday’s selling, especially since this morning’s data carries much more weight than any of the nuggets of info that market bulls based the stock rally on. At the very least, today’s data underscores the fact that Wednesday’s economic optimism was certainly premature. I suspect we may see some weakness in stocks into closing as investors look to lock profits. If this is the case, we could bond prices rise this afternoon, possibly improving mortgage rates further.