Friday's bond market has opened strong following the release of weaker than expected employment figures. The stock markets are reacting negatively to the news with the Dow down 85 points and the Nasdaq down 11 points. The bond market is currently up 20/32, which should improve this morning's mortgage rates by approximately .250 - .375 of a discount point.
The Labor Department gave us today's big news, saying that the U.S. unemployment rate rose 0.3% to 5.1% last month, exceeding forecasts of 5.0%. The second reading that was favorable to bonds was the number of new payrolls added to the economy. Analysts were expecting to see a decline of 50,000 jobs but today's report revealed a drop of 80,000. It also revised February's job total lower by 13,000 jobs. The average hourly earnings reading met forecasts of a 0.3% increase and was not much of a factor in today's trading.
Today's news indicates that the employment sector is weaker than expected, which is good news for bonds and long-term securities such as mortgage-related bonds. The weak job report supports the theory that the economy may be heading for a recession very quickly if not already there. This usually translates into bad news for stocks, which makes bonds more attractive to investors.
Next week is very light in terms of economic releases for the markets to digest. There is no relevant data scheduled for release Monday, so I am expecting the stock markets to be the biggest influence on bond trading and mortgage rates.
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The Pickering Group
Jeff A Pickering
Phone (623)551-9360
E-mail: jeff@pickeringgroup.com
Web site: http://www.pickeringgroup.com/
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