Job Growth Strong

The Bureau of Labor Statistics releases their estimate for new hires in the month of November. As we anticipated, it showed a stronger number than the market estimated.  According to the BLS, there were 228,000 new payrolls added to the US economy.  This beat expectations of 190,000 by 38,000. In addition, there were upward revisions to the prior two months’ reports that added another 3,000 to the labor force.  However, the Average Hourly Earnings number was below expectations, showing only a 0.2% increase for the month.  This puts the annualized rate at 2.5%, which is below the 2.6% level the market was expecting.

Given that we are coming into the stronger consumer purchase season of Christmas, we can expect to see the number of overall jobs climb at a healthy pace. However, since most are retail and service related, they will not be high earning positions.  As a result, wage pressure will not be greatly impacted.

Mortgage bonds are down on the morning. With the 100 and 200 day moving averages just beneath current levels, bonds are again at a critical point. Stocks continue to drive higher in early morning trading. If this continues throughout the day, we could see bonds lose their capacity to stay above the two aforementioned moving averages.  A break beneath these levels would be terrible news for the near-term direction of mortgage interest rates.

With mortgage bonds showing early signs of a downward trading channel, we will maintain our locking bias.