No economist or analyst could have anticipated January’s employment reports, with the household survey showing a substantial drop in the unemployment rate but the payroll report showing continued weak job growth. The variance in the figures is being blamed on the weather by economists who previously have made a big ordeal about the fact that weather would not affect the numbers. Nonfarm payrolls increased only 36,000 with private payrolls increasing 50,000. They were expected to increase 146,000 and 145,000, respectively. It seems unlikely that a 9.0% unemployment rate will be sustainable given the weak pace of job growth.
The bond market reaction to the data has traders and investors erring on the side of a strengthening economy and job growth. Treasuries sold off causing the yield on the 10 year note to spike to 3.64% after closing at 3.55% Thursday. Mortgages are worse in price by .375% to .50%.
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