November Job Report
Mortgages are lower after a stronger-than-expected employment report. Nonfarm payrolls rose by 146k vs. the consensus of +85k. The headline rate dropped to 7.7% from 7.9% a month ago. A weak report would have been easy to charge off to Hurricane Sandy, but strength in employment is a little harder to rationalize given the recent trends in economic conditions. A closer look at the headline unemployment rate reveals that the drop in rate is actually due to a 350k decline in the labor force, with employment dropping by -155k and unemployed dropping by -229k. So better number, but for the wrong reasons. We’ve seen decent profit taking from hedge funds into the down trade post-NFP, leaving current coupons down 5+/32nds on the day. While lower on the day, I don’t see anything that suggests mortgages won’t continue to grind higher.
Stocks are up modestly with the DOW +42 pts.