"Be careful what you wish for, you might just get it" - many Traders were hoping that the Jobs Report would come in below expectations, as to clearly pave the way for a Fed rate cut on Sept 18th. In fact, the Jobs number was so lousy the only debate left is if the cut will be .25% or .50%. There is talk circling in the trading pits that the Fed is already behind the curve and the US economy may slip into a recession if the Fed does not step in quickly.
The Labor Department reported a loss of 4,000 Jobs in August, that's correct a loss! This is in sharp contrast to the 100,000 - 110,000 jobs expected. Making a bad number worse was the downward revisions of 87,000 to the last two months. This month's loss in Jobs was the worst report in four years. The current three month average of Job growth now stands at just 44,000, below the 127,000 three month average seen last month. This awful read on Jobs is demoralizing Stocks and this has helped Bonds breakaway higher.
The unemployment rate remains steady at 4.6% and is seen as the only piece of good economic news within the report.
This morning's surprisingly weak Jobs Report has helped the Bond breakaway from the 200-day Moving Average. It will now be important for the Bond to hold these gains and make the 200-day Moving Average a real floor of support. The Bond remains very overbought and could reverse lower if Traders decide to sell Bonds and take profits from this rally higher.
For now, let's float and watch how the Bond trades as it approaches strong resistance about 25bp higher than present levels. But as always stay tuned as the market volatility hasn't gone away.
Article commentary compliments of Mortgage Market Guide.
It looks like the markets are finally turning towards lower rates! Between rates and market price decreases, it's getting to be a GREAT time to buy a home!