Job Growth Strong

This morning’s Bureau of Labor Statistics Jobs report showed that growth in the US labor force was strong in the month of October. According to the report, there were 261,000 new jobs created. Although a very strong number, it was below estimates.  With this last month reflecting employees being rehired following the massive floods, it isn’t really a true reflection of the strength of the labor force.

One interesting segment of the report was the Unemployment Rate, which ticked down to the lowest it has been since December 2006. However, this drop was due to a drop in the labor force of 765,000, which is not a positive sign.  For our economy to grow in a healthy way, we need for more Americans to be willing to work.  If that doesn’t happen, we will see wage based inflation move higher as people are having to fight for workers with higher pay.

President Trump’s pick to replace Fed President Janet Yellen has the markets celebrating. Jerome Powell is thought to be a more “dovish” choice, which is upsetting many of the Republicans who were hoping for a Fed President who would drive interest rates higher.  However, President Trump seems committed to keeping interest rates low in an effort to maintain strength in the stock market.  Since it seems he is primarily measuring his success based on the stock market, this is good news for mortgage interest rates.

Mortgage bonds are still showing a strong technical picture. As a result, we will maintain our cautiously floating stance.