December 4th, 2009 4:25 PM by Mel Samick
Friday's bond market has opened down sharply due to the results of this morning's Employment report. The stock markets are rallying around the news, pushing the Dow higher by 23 points while the Nasdaq has gained 21 points. The bond market is currently down 28/32, which should translate into an increase in this morning's mortgage rates.The Labor Department gave us today's news that was so bad for bonds. They reported that the U.S. unemployment rate fell to 10.0% last month when it was expected to remain at 10.2%. They also announced that only 11,000 jobs were lost last month, falling well short of the 125,000 loss that was forecasted. In addition, today's report also revised October's job loss lower by 79,000 jobs. These were big numbers for the markets and indicate that the employment sector was not nearly as weak as many had thought. That is bad news for the bond market and mortgage rates because a strengthening labor market means a broader economic recovery is more likely.In a small bit of good news, the report showed that average hourly earnings rose only 0.1% last month when it was expected to show a 0.2% increase. This means that earnings paid to workers did not rise as much as thought, which is good news for bonds because it eases wage-inflation concerns. However, this is the least important of the three major readings in the data and had little impact on this morning's bond selling.Also posted this morning was October's Factory Orders report. It also revealed a stronger than expected reading for October and revised September's orders much higher than previously announced. The 0.6% increase was well above forecasts for October, indicating that the manufacturing sector may be gaining steam. While this data can be considered negative for bonds and mortgage pricing, it is not nearly important as the monthly Employment report and has had little influence on this morning's mortgage rates.