Jobs report is out

The highly anticipated Jobs Report was released today, showing that more new jobs were created in the month of June than anticipated. While the markets expected to see 160,000 or so, actual numbers showed that 195,000 new jobs were created. In addition, there was an upward revision of 70,000 new hires from the prior two months. However, the unemployment rate was unchanged, after expecting to drop down to 7.5% from present levels of 7.6%. As we have talked about in our recent newsletters and market commentaries, as the labor market improves it has caused many to decide to re-enter the workforce. As this trend continues, it will make it more difficult for the unemployment rate to reach a target of between 6.5% – 7%, which is where the Fed will likely end their bond purchase program.

Mortgage bonds were sent into a virtual free fall after the report, trading as much as 162 basis points lower at the time the stock market was opening. Days like today impact interest rates by .25% – .375% in a matter of minutes. What was once a rare occasion has become somewhat normal to us, as we have faced several similar days in the past two months. Given the volatility in the markets, a locking stance is prudent. However, with as much damage that has been done, we are hoping that the move down has been over exaggerated due to many traders taking an extended vacation. Let’s hope things get better from here.