Job Gains Explode Higher

A look at today’s charts show that stocks, mortgage bonds and the 10 Year Treasury Note yield all hit their 50% Fibonacci Retracement levels and bounced from there. Markets can correct and have losses or gains up to 50% of prior losses / gains and still be considered a healthy correction. This is great news for stock investors who are hopeful this was nothing more than a healthy correction and that prices are now set to climb higher from here. On the other side, this could mean that the improvements we have seen in mortgage interest rates are nothing more than a healthy correction, and we can expect to see mortgage interest rates climb higher after bottoming out at the 50% Fibonacci level.

This morning’s Bureau of Labor Statistics (BLS) report showed that there were far more jobs created in the month of December than the market anticipated. While the market expected to see a number close to 190,000, the actual results came in at 312,000. In addition, the Labor Force Participation Rate increased from 62.9% to 73.1%, which forced the Unemployment Rate to move from 3.7% up to 3.9%. My assumption is that many retired employees stepped back into the labor force to accept seasonal employment over the holiday season. That could account for some of the gains in new hires as well as the sudden increase in the labor force.

Mortgage bonds are losing their gains made yesterday. We will suggest a locking bias while we wait to see if the 50% Fibonacci Retracement level will stop the rally mortgage interest rates have enjoyed for the past couple of months.