Friday January 7, 2011 6:29 PM ET
By John Sauro
Jobs Report Disappoints
Wednesdays ADP report raised eyebrows and expectations; however, today’s Jobs headline was a bit of a disappointment. Private job growth was 113,000, below expectations of 162,000. The Unemployment rate declined to 9.4% from the previous reading of 9.8%. This is the lowest unemployment rate since May of 2009. The real level of Unemployment, called the U-6 dropped to 16.7%, down from the prior month’s reading of 17%. This reading takes into account people that are marginally attached to the workforce and people that have accepted part-time jobs.
Sauro Interview on Bloomberg
Volatility Remains The Story
The Fannie Mae Bond dropped almost 100 basis points on Wednesday to close at 98.65 and recovered today up 59 basis points to close at 99.56.
Reports about the economy improving continue, as the Institute of Supply Managers Services Index was reported at 57.1, which was stronger than expectations of 55.7 and the best reading in almost four years.
Mortgage Bonds may see a bit of a rally this month, but not enough to bring down significantly.
My bias is toward locking into rates here, as there is more of a chance of rates moving higher over the short term.