Interest Rate Roundup

Friday, January 05, 2007

jobs report stunner whacks the bonds

Yesterday, I said bond prices were at a key level -- testing the underside of a broken uptrend. And boy are they failing ... in a major, major way ... in early trading. The catalyst? The December jobs report. Some meat from the numbers:

* Nonfarm payrolls ROSE 167,000 on the month, vs. forecasts for a 100,000 gain. And "unofficially," I think a lot of people were looking for a nasty number because the ADP jobs report said the economy LOST 40,000 jobs.

* The unemployment rate remained at 4.5%.

* Here's the biggie for bonds: Average hourly earnings surged - up 0.5% vs. market forecasts for a 0.3% gain. The year over year gain in AHE was 4.2%, above the 4.0% forecast. This tied last month's cycle high, which was the highest since early 2001.

Bottom line: Bonds were UP about a half point going into the number. They're DOWN about a half point now. That's a gigantic reversal. I can't wait to see how things close.


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