In today’s economic news the US Bureau of Labor Statistics released its latest data on the health of our nation’s employment. The unemployment rate rose from 4.7% to 4.9% while Non-Farm Payrolls surged by an unexpected amount of 287K. This was the largest increase since October of 2015. May was revised to show an increase of 11K from the originally reported figure of 38K and April was revised to show a gain of 144K from 123K. Average Hourly Earnings increased by .1%. The Labor Participation Rate was 62.7. The latest data helped to reduce concerns following last month’s very weak report and the three month average of 147K jobs is more in line with expectations. Despite the strong jobs report interest rates remain near record lows because of Brexit and global market uncertainly.
The European Central Bank is in a difficult position with the BREXIT developments. They spent 81.5B euros on quantitative easing in June and hold over a trillion euros of debt. The challenge now is that over 50% of sovereign bonds yield under 0%. The ECB initially indicated there would be no QE changes over the summer but now are faced with huge uncertainty as the BREXIT proceeds.
The good news for U.S. borrowers is the signal that the global economic recovery is still wobbly. Flight to safety buying of U.S. debt instruments such as mortgage bonds continued into the first portion of July. This caused prices to rise and rates to fall. Now is a great time to take advantage of the historically favorable rates.