Daily Commentary by Larry Baer: A massive off-of-the-charts surprise gain for job
creation during the month of February has knocked the wind out of mortgage
investors resulting in higher mortgage interest rates and lower prices today.
The Labor Department
reported earlier this morning employers added 236,000 new jobs last month, well
above expectations. Over the course of the past three-months the economy
has created 191,000 net new jobs, a respectable pace.
The national jobless
rate fell to a post-recession low of 7.7%. The decline is due both to an
increase in household employment and a contraction in the labor force.
The labor participation rate fell to 63.5%, its lowest levels since 1981.
Economists are dismissing the decline because much of the outflow from the
labor force came from employed workers, suggesting the drop has largely been
created by an increased pace of retirement among baby boomers.
No matter how one
chooses to "slice-and-dice-it - today's news from the labor sector was
solid. The big question now is whether this strength can be sustained in
the face of the federal government's budget sequestration and the unit labor
cost impact of Obama Care soon to come.
Looking ahead to
next week Uncle Sam will be in the credit markets conducting a three-part debt
auction. The Treasury will sell $32 billion of 3-year notes on Tuesday,
$21 billion of 10-year notes on Wednesday, and $13 billion of 30-year bonds on
Thursday. The economic calendar will feature February Retail Sales on
Wednesday, weekly jobless claims and the February Producer Price Index on
Thursday followed by the February Consumer Price Index on Friday.
It will likely be
difficult for mortgage interest rates to make much, if any, headway toward
fractionally lower levels before the Treasury debt auction series concludes on
Thursday.
