Market Comment LOOKING AHEAD
Weaker Payrolls and Lower Rates The December employment report came in mixed with a strong headline rate and a weak jobs component. Unemployment came in at 6.7%, considerably better than the expected 7.1% rate. The payrolls component showed jobs increased 74,000 compared to the 187,000 increase expected by analysts. The figure was a negative sign for the recovering economy and reduced the fear of additional Fed tapering in the short term. The fortunate consequence was a sharp decrease in mortgage interest rates Friday morning which carried into the afternoon as investors poured funds into mortgage bonds. The Bureau of Labor Statistics (BLS) of the U.S. Department of Labor compiles data from two different surveys that they conduct, the household survey and the establishment survey, in order to complete the employment report. This explains why there are often unexpected divergences between the unemployment rate and payrolls figure. The data for December showed this disparity very clearly. Fortunately traders focused on the payrolls, mortgage bonds rallied, and mortgage interest rates fell sharply. Now is a great time to take advantage of the drop in rates. To unsubscribe, please hit “reply” and include unsubscribe in the subject line.
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