The jobs data surprised even the most bearish economists with payrolls increasing by a nominal 54,000 in May while the jobless rate rose to 9.1%. The median forecast in a Bloomberg News survey called for payrolls to rise 165,000. Private hiring rose 83,000 while government payrolls shrank by 29,000; mostly state and local government jobs.
The market’s initial reaction was a steep decline in stocks and a rally in bonds, with the yield on the 10 year note falling to 2.95%.
The markets reversed course on the ISM non-manufacturing data, which reflected an 18th straight month of growth in U.S. service sector. Bonds gave back all of their gains after this data, with the yield on the 10 year note climbing above 3% to 3.02%, the level at which it closed Thursday. Mortgage pricing will be slightly better, approximately .10% to .20%.
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