Bad is bad but not worse.
As you are probably well aware by now -- employers slashed payrolls by a smaller-than-expected 539,000 workers in April. That was the smallest number of jobs lost on a national basis since October -- and was well below economists' estimates for an April headline nonfarm payroll job loss figure of 600,000+. April is the first month that job losses have not exceeded at least 600,000 since December of '08.
It is worth noting that private payrolls fell by 611,000 last month -- but that loss was offset by government hiring of 72,000 workers for the 2010 census. That particular detail, together with the fact that the national jobless rate rose to 8.9% from the March level of 8.5%, sharply muted the initial shock among mortgage investors caused by the "surprisingly improved" headline nonfarm payroll number.
As I write, it appears the "Maalox Moment" created by this morning's employment numbers has passed and calmer, cooler heads are buying mortgage-backed securities - most likely motivated by the idea that it will still be many months before meaningful improvements in the nation's labor sector will develop. These more experienced investors are also keenly aware the Fed still has more than $750 billion in their back pocket, earmarked for nothing other than to support steady to perhaps fractionally lower mortgage interest rates. It makes no sense to expect mortgage interest rates to move dramatically higher until the Fed has burned through at least another $200 billion of their big mortgage market friendly "war chest."
Looking ahead to next week the economic calendar will include Wednesday's April Retail Sales numbers together with the inflation story contained in Thursday's Producer Price index and Friday's Consumer Price Index. All three measures are expected to show minuscule gains. If so, look for these reports to draw nothing more than a disinterested shoulder shrug from mortgage investors.
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