Today's mortgage market reaction to the weaker than expected Employment report appeared to be counterintuitive, as mortgage rates rose a little after the news, offsetting some of the rate improvement seen earlier in the week. The explanation is that the jobs data was so bad that investors now expect that another economic stimulus package will be implemented soon. The government will need to issue even more debt to pay for a stimulus package, and mortgage investors pushed rates higher on Friday on concerns about the added supply of debt.
As expected, the Employment report reflected weakness in the labor market. The economy lost -240K jobs in October, and the figures for August and September were revised lower as well. This marked ten straight months of job losses in 2008, bringing the total decline in jobs to 1.18 million so far this year. The manufacturing and construction sectors continued to show weakness.
The Economic Calendar will be much lighter next week. Next Friday's Retail Sales report will be the only major economic data for the week. Consumers account for about 70% of economic activity, and the Retail Sales report is a major indicator of spending levels by consumers. Import Prices and Consumer Sentiment will also be released on Friday. Other than that, the only report will be the Trade Balance on Thursday. There will be Treasury auctions on Wednesday and Thursday. Mortgage markets will close early on Monday and will be closed on Tuesday in observance of Veterans Day.
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