Mixed Reports on the Labor Market

Stocks are climbing higher this morning, moving towards the top of the trading channel.  This move was spurred by a strong Bureau of Labor Statistics (BLS) report that showed 4.8 million jobs created in June.  Further, there was an additional 2.5 million gain to the May report.  With this report being much stronger than the market anticipated, we are seeing stocks rally.  However, with the top of the trading channel just above current levels, it seems more likely to see stocks pause rather than continue to climb.  We will have to wait and see how this plays out.

Another important component of the BLS report is the Unemployment Rate, which showed a decrease from 13.3% down to 11.1%.  Again, this report was stronger than the market’s expectations of 12.3%, and shows that millions of American workers have returned to work.

Initial Jobless Claims were also reported this morning, showing that a staggering 1.427 million workers filed for first time benefits last week.  Continued Claims saw little movement, showing that 19.29 million people who have been unemployed continue to receive benefits.  This doesn’t necessarily coincide with the strong job gain report from the BLS, so it will be interesting to see how the next month plays out.

With stocks near the top of a trading channel, we could see mortgage bonds stabilize for the moment.  However, bond prices also remain near the top of a trading range, which makes locking a prudent move for many.