The Jobs Pump Fake

Good morning everyone and happy Friday!

Well Mortgage Backed Securities leaped out of bounds chasing this morning’s disastrous jobs report. At market open, the MBS market shot straight up 33 bps and right through the 100 DMA that we addressed in our last article. Within an hour, investors came to the conclusion that MBS’ are in overbought territory and they came crashing down to about where they closed yesterday. Let’s look into the report.

The market was anticipating 1 million jobs to be created in April and boy were they wrong. The jobs report came in at 266k – 26% of the anticipated number. Not only is this a disappointment because it missed expectations, it’s a bigger disappointment because there are 7.5 million jobs across the county that need to be filled! This is the highest percent of jobs listings unfilled since 1973. This raises the concerning question that we have seen multiple times throughout the pandemic – how many people are making enough of a living staying home and collecting stimulus?

We will see how the market takes this reading over the weekend, but we know one thing for sure. The 100 DMA is a strong ceiling and will take some market moving news to break through. We are holding a locking bias going into the weekend.

Finish off the week strong!