as seen on Mortgages By Norm Dubois - Market update So we finally got the September NFP today after a delay due to the government shutdown. Now we all knew that this report would be taken with a grain of salt. The consensus was 180k with the buzz that we may see a print a little above that towards 190k. The buzz number is much more than water cooler talk because it gives a feel for the post number reaction by indicating a strong or weak report. Anyway the report was a weak number. It was much weaker than expected and the bond markets are responding appropriately with the move down towards a 2.50% 10yr (currently 2.53%). Here are the highlights: - Nonfarm payrolls rose only 148k in September. Now keep in mind that this is all pre-government shutdown so even the biggest optimist would find this number to be very weak as we head into future NFP numbers that are expected to be adversely affected by the government shutdown. - The August revision was +24k and the July revision was -15k. So all-in-all the revisions were close to a wash and had little impact. - The alarming number within the 148k was that private sector jobs only gained 126k. This is a clear sign that the private sector which is always the catalyst for sustained job creation is very cautious in adding payroll. A sign of uncertainty in the future? - The unemployment rate did drop to 7.2% from 7.3% but this did reflect a marginal drop in the participation rate to another multi-decade low. So again this is a lot of the same old story where people are leaving the workforce. So far the unemployment rate has dropped from 7.8% to 7.2% in 2013 but this is entirely due to the drop in the participation rate. There are certainly a ton of social statements that could be made about this fact but I will spare everyone my thoughts. - Average hourly earnings ticked up slightly by .1%. Far from overwhelming. As you can see there is nothing in this report that makes anyone think that the Fed will taper anytime soon and we have not even gotten to the government shutdown affected numbers. Therefore all that chatter in May, June and July about the Fed tapering and the move to a 3.50% 10yr seems like a distant memory. The feeling in the bond markets right now is that a 2.50ish 10yr is here to stay for the next few months until data strongly suggests otherwise. As mentioned the other day I saw the Fed tapering in March. However, if we continue to see numbers like this then that may turn out to be March 2015.
Posted on: Tue, 22 Oct 2013 14:41:05 +0000