The Bureau of Labor Statistics’ (BLS) Jobs Report came in way stronger than expected. While the market was looking for 205,000 new job creations, the actual figure came in at a whopping 313,000. In addition, the prior two month’s reports were revised higher by a combined 54,000. In the history of job reports, I don’t remember a single one where the market was this far off of reality. Economists seem to be out of touch with the strength of the labor force. We will have to see if this trend continues.
Although mortgage bonds experienced an adverse impact to the report, it was tamed by the Average Hourly Earnings number only increasing by 0.1%, which lowered the year over year average from a 2.9% rate to 2.6%. Since wage based inflation is among the greatest concerns of bond investors, this was good news.
Another critical part of the report was the Unemployment Rate, which held steady at 4.1%. Since the labor force grew by a greater number than the rate of new jobs created, this held constant. Also good news for mortgage interest rates.
The stock market is dramatically higher today, as stock investors celebrate the job report. Stocks are once again within striking distance of all-time high levels. The fears that investors felt in February seem to be behind us.
Once again…. we will maintain a locking bias.