Is Job Growth Really a Surprise?

Mortgage interest rates took a step higher as the stock market rally sucked the air out of the bond market.  Stocks are celebrating what is stated to be a surprise 2.5 million uptick in the labor market.  What is fascinating is that economists were expecting to see a loss of 7.7 million, so there was more than a 10,000,000 swing between expectations and reality.  This ridicules difference far exceeds any missed expectation in the history of tracking job growth.  Given that most states have opened back up, of course we will see many who were furloughed return to work.  These are some serious amateur projections heading into the Bureau of Labor Statistics report.

The S&P 500 is now above 3200, less than 200 points away from all time high levels.  A couple more rally days like today and stocks could report record highs. Given a large percentage of Americans have at least taken pay cuts, and many of those who lost their jobs will never return, it is a miracle that stock investors are as optimistic as they are.  Further, many large businesses have been forced to take on more debt to get through this difficult time.  This added interest burden will impact future profits and hurt P/E ratios.  I guess that some things will just never be explained.

Luckily, we have been in a locking stance, which we will continue in the near term.