The highly anticipated BLS Employment Report was released this morning. While the market was expecting 180,000 or so new jobs created, the actual number WAS ONLY 113,000!. The unemployment rate, however, dropped from 6.7% down to 6.6%. The unemployment rate is determined from a household survey, which showed that jobs increased by 638,000 in the month of December! The huge disconnect in the two different sets of data explain why the unemployment rate can drop down to 6.6% even when the BLS Report of job growth is virtually anemic. It makes you wonder which is more accurate….
With this report behind us, markets are feeling a sense of relief. Both the bond market and the stock market are currently higher, with mortgage bonds pushing up above resistance. However, we are nowhere near the lows we saw earlier in the week. Given that we are still in a battle with resistance, we will suggest a locking bias unless we make a decisive move above resistance.