Friday’s bond market has opened down fairly sharply due stronger than expected employment news. The stock markets are reacting favorable to the same data, pushing the Dow higher by 43 points and the Nasdaq up by 8 points. The bond market is currently down 17/32 with its yield cracking above 2.00% again, which will likely push this morning’s current home mortgage rates higher by approximately .375 of a discount point.
Economic Data and Mortgage Rates
The Labor Department posted the data that is the cause of this morning’s bond selling. They announced that the U.S. unemployment rate fell 0.2% to 7.7% last month and that 236,000 new jobs were added to the economy. The unemployment rate was expected to remain at 7.9% and only 165,000 new jobs were predicted. Both of those readings hint at a stronger than thought employment sector, clearly making the data negative for the bond market and current home mortgage rates.
Stock and Bond Markets
This morning’s reaction in stocks seems to be a little subdued considering the results, but the bond market is reacting as we would expect. It is worth noting though that there was a downward revision of 38,000 to January’s job total. Therefore, we have averaged approximately 177,000 new jobs each month year-to-date and post-Fiscal Cliff crisis, which is well below what is believed to be needed to keep the economy moving forward at a respectable pace. This will put even more importance on March’s data when it is posted early next month.
What is expected next week
Next week also has some very important economic data scheduled along with a couple of Treasury auctions that are also relevant to current home mortgage rates. The good stuff doesn’t start until Wednesday, so we can expect stock movement and weekend news, particularly budget-related tidbits, to drive bond trading and current home mortgage rates the first couple days. Look for details on next week’s events in Sunday’s weekly preview.