Just like a blind squirrel finding a nut every once in a while, our jobs estimate came close to the mark.
- Nonfarm Payrolls fell 467K, Unemployment Rate 9.5%. and the Workweek/Average Hourly Earnings virtually unchanged.
- Jobs losses were across the board with only the health care and education sectors showing any gains.
- Even the government shed 52K jobs.
The unemployment rate now stands at the highest level since August 1993. The report is weak at best and paints a picture of continued slow growth into the future. To attain any growth in the economy, the consumer will need to take the lead. Given the fact that employment is weak, savings rates have gone from zero to near eight percent, and consumer credit quality is below average, the economy will move at a very slow pace.
Expecting 1% to 1 ½% growth could be in vogue for years. What this means for our industry is a period of low rates well into the future.
As we expected, stocks have taken it on the chin, down 150 points on the big board. The 10 year note has a little giddy up in it’s get a long, up 10/32’s to yield 3.51%. Mortgage backs are plus 5/32’s as we speak. Factory Orders just hit the tape, up 1.2%, a touch better than expected. Look for the market to trade with a neutral/bullish mood, struggling with resistance at the 3.50% level on the 10 year note. Overall, we like the bond/mortgage back market and would shy away from stocks until we see 8000 on the Dow. More this afternoon as we wrap up the pre-holiday trade.