Daily Commentary by Larry Baer: The number of Americans filing first-time claims
for government unemployment benefits hit a four-month high during the week
ended March 30th.
Initial jobless
claims increased 28,000 to a seasonally adjusted 385,000, the highest level
since November of 2012. It was the third straight week of gains for
jobless claims - confounding economists' consensus forecast calling for a drop
to 350,000. The outsized jump in jobless claims should be taken
with a grain of salt - since new filings this time of year are volatile because
of holidays and the timing of school spring breaks. From a historical
perspective new filings have risen in the week including Good Friday over the
past several years. Therefore, I don't think we ought to read too much
into this week's report. The trend trajectory of the weekly initial
claims data over the next three or four weeks will be much more telling.
Be aware today's
jobless claims reporting period fell outside of the survey time frame for
tomorrow morning's much more important March nonfarm payroll report. Even
so, many analysts have been busy marking down their March nonfarm payroll
projections - with most now expecting the economy probably created 195,000 net
new jobs last month -- and a few even suggesting the national jobless rate may
have ticked up to 7.8% from last month's 7.7% level.
This morning's rally
in the mortgage market reflects mortgage investors' overall expectations for a
softer-than-expect March employment report. In order for the rally to
continue tomorrow the March labor story will have to deteriorate significantly
below investors reduced expectations. While such an outcome is certainly possible
- it is not very probable. The greater risk in my opinion is that
tomorrow's headline employment number comes in at 200,000 or more and the
jobless rate hits 7.7% or less. Numbers like these would likely induce a
round of profit-taking among mortgage investors strong enough to reduce or
completely eliminate today's price gains.
The easiest way to
make money in this business is not to loose it to start with. Have a plan
- and be prepared to unhesitantly execute it.
THE MARKET
IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
