Sunday, December 08, 2019

Market Commentary

Updated on December 6, 2019 10:29:58 AM EST

This morning’s major economic release was November’s Employment report at 8:30 AM ET that showed the employment sector remained strong last month. It revealed that 266,000 new jobs were added to the economy last month and that October and Septembers numbers were revised higher by a combined 43,000. Those revisions combined with November’s number pushes the 3-month average above a healthy rate of 200,000 new jobs per month. Also in the bad news column is word that the unemployment rate slipped 0.1% to again stand at September’s rate of 3.5%, which was the lowest since 1969.

In a bit of somewhat favorable news was a 0.2% rise in average hourly earnings. That reading was slightly softer than the 0.3% that was expected. The bond market is sensitive to the earnings figures, but the other two primary headline numbers far outweigh any benefit we may have gotten from the earnings news.

The final report of the week came at 10:00 AM ET this morning when Decembers preliminary reading to the University of Michigans Index of Consumer Sentiment was released. It came in at 99.2, exceeding expectations and up a few points from November. That means surveyed consumers felt better about their own financial situations than many had thought. This is bad news for bonds and rates because the more comfortable consumers are with their own finances, the more likely they are to make large purchases that fuels economic growth.

Next week brings us the release of several important economic reports along with a couple of potentially influential Treasury auctions and the last FOMC meeting of the year. The calendar is busiest mid-week, but Monday is the only day with nothing scheduled that is relevant to rates. Look for details on all of next week’s activities in Sunday evening’s weekly preview.

 ©Mortgage Commentary 2019