Today saw the release of the Jobs data. Last month's data was a big surprise 
in favor of bonds, this one was the exact opposite as it was a big surprise going against bonds.
The Jobs Jamboree consists of non-farm payrolls, unemployment rate, revisions to prior month's data, average work week and hourly earnings. Lots of data at the same time reflecting current inflationary pressures (wage based).
Last month saw a big surprise with a loss of 4,000 jobs versus expectations of 100,000. Today's data blew everyone away though. Not only did the jobs number exceed expectations, 110,000 versus 100,000, but the revision to last month's data was upward, not downward as expected. In fact, the revision was a major revision, going from -4,000 to 83,000.
Combine that data with larger than expected hourly earnings growth and the other data being in line and you have the makings of a perfect storm for sending bonds lower, fast.
OK, maybe not a perfect storm, but it definitely destroyed the bond market today with them dropping 41bp so far. They are currently just below their 200-day Moving Average, an important support layer which staying below would signal higher home loan rates ahead.
It reiterates how my previous post may be truer than most think. Go back and read Will the Fed Regret Cutting Rates? to see what I mean.
Comments