Daily Commentary by Larry Baer: The number of Americans standing in line to file claims for first-time government unemployment benefits fell 6,000 last week to the lowest level in nearly four years. The survey period for today's report fell outside of the survey period for tomorrow's much more important March nonfarm payroll report - but investors see today's figures supporting the likelihood that the economy created at least 200,000 net new jobs last month - a value that will not likely be supportive of the near-term prospects for notably lower mortgage rates.
A March headline nonfarm payroll number of 190,000 or less and/or a national jobless rate of 8.4% or higher will likely create a sell-off in the stock market that will prove supportive of steady to fractionally lower mortgage interest rates. While this outcome is certainly possible - it is not very probable.
Should the March nonfarm payroll number exceed 200,000 and/or the jobless rate post a reading of 8.3% or lower - it will mark the longest stretch of monthly employment gains of 200,000 or more since 1999. Against such a backdrop the probabilities will favor additional improvement in the stock markets at the expense of yet fractionally higher mortgage interest rates.
In my judgment the chances are strongest that the March nonfarm payroll figures closely approximate the consensus estimate calling for new payroll gains of 200,000 and a jobless rate of 8.3%. These values are already well priced into the market so reaction from credit market participants will likely be limited - especially in an exceptionally short pre-holiday trading session.
