Stocks and Mortgage Bonds are both lower after the Bureau of Labor Statistics (BLS) reported that there were 528,000 jobs created in July, which was more than double expectations of 250,000. There were also 28,000 positive revisions to May and June.
The Unemployment Rate declined from 3.6% to 3.5%, which was lower than expectations of a fifth month in a row of 3.6%. The unemployment rate comes from the household survey, which has its own job creation component. This report showed 179,000 job creations, while the labor force decreased by 63,000. For those reasons, the unemployment rate decreased, but again, partially due to the in the labor force and participation rate declining another 0.1% to 62.1%.
The real unemployment rate is higher than 3.5%, but the U-3 is what everyone looks at and removes individuals who are not actively searching for a job - There are almost 6 million people who are not being counted that “want a job” but have not looked in the last four weeks.
The U-6 all-in unemployment rate, which adds back all these individuals, remained at 6.7%.
Average hourly earnings were up 0.5% in July and are up 5.2% year over year. Average weekly earnings were up 0.5% and are up 4.6% year over year.
With the decline in GDP and increase in Jobs, it speaks to a lack of productivity – You are hiring more employees and getting less goods. This can be inflationary, which the Bond market does not like.
Next week is another important one, highlighted by the July Consumer Price Index inflation report. Remember that the July figure from 2021 that will be replaced was relatively low around 0.5%.
Mortgage Bonds are giving back all of their gains from the previous two days and now find themselves just above a quadruple floor of support, formed by the 25-day Moving Average, 50-day Moving Average, Fibonacci level, and rising trend line, which is holding so far. The 10-year has moved up to 2.83%, currently battling with its 100-day Moving Average.
