The bond market has so far shrugged off this morning Bureau of Labor Statistics Job Report that showed 252,000 new jobs created in the US market. Although this was only 7,000 more than the 245,000 anticipated, the prior two months’ reports were revised higher by another 50,000. Adding additional strength to the report was the Unemployment Rate falling from 5.8% all the way down to 5.6%. The Unemployment Rate was helped lower by a continued drop in the Labor Participation Rate, which dropped 0.2% down to 62.7%. As fewer Americans desire employment, the Unemployment Rate will fall. In fact, 300,000 people left the workforce in the month of December. This can partially be contributed to a roaring stock market which has provided many retirees the ability to comfortably leave the workforce.
The 10 Year Treasury Note continues to help support lower mortgage interest rates, with the yield now back down to 1.96%. As long as we see the yield stay below the critical 2.02% market we have identified, yields have clearance to fall even lower. Also supporting the mortgage market is the stock market, which has been pressured lower today. As investors sell stock holdings they often move the money directly into the bond market which helps support lower mortgage interest rates.
With the BLS Jobs Report now behind us, we will have a cautiously floating bias. The increase in market volatility will likely continue, with bonds trading in a wide range. Next week will be a heavy news week, starting on Tuesday and heating up as the week progresses. If you need to close soon, be careful not to miss out on the opportunities in front of you. Interest rates are amazing and opportunities can be lost quickly.