January 8th, 2010 4:27 PM by Mel Samick
Treasuries and mortgages are bouncing better this morning on yet another wild employment report. Never changes; the monthly employment data has a well defined history of roiling markets and setting off debate that in the end doesn't change anyone's overall opinion. Whether bullish on the economic recovery or still fretting over the lack of jobs and the declining housing sector, the employment report always confuses as it has again this morning.
Dec non-farm jobs saw a decline of 85K as most economists were expecting an unchanged number; the range of forecasts was -80K to +100K. The unemployment rate was unchanged in Dec at 10.0%. Nov NFP was revised to +4K frm the original release of -11K, Oct NFP was revised from -111K to -127K. Dec average hourly earnings were up 0.2% which is the increase we see every month. No job creation but markets still believe the economy will continue to improve as businesses do better by cutting jobs and spending. Kind of ridiculous that markets are so willing to dismiss the fact that jobs don't matter. Where in the world does that idea permeate from? From The Street and from those making a living touting buying of stocks. Since the beginning of the recession a total 7.2 mil jobs have been lost; in the past year (2008) 4.2 mil jobs were lost and for the past six months 6.1 mil have lost jobs. 661K people have dropped out of the work force; no matter the spinmiesters making this pigs ear into a silk purse, the lack of jobs and the continuing decline in jobs is not encouraging. The 7.2 million drop in payrolls over the past two years has been the biggest as a percentage of all jobs since World War II was ending in 1944-45.
Factory payrolls declined 27,000 after decreasing 35,000 in the prior month. Payrolls at builders fell 53,000 after decreasing 27,000. Financial firms increased payrolls by 4,000, after a 6,000 decrease the prior month. Service industries, which include banks, insurance companies, restaurants and retailers, subtracted 4,000 workers after adding 62,000 in November. Payrolls increased at professional business services and education and health in the last two months. Retail payrolls decreased by 10,200 after a 13,500 decline in Nov. Government payrolls decreased by 21,000 after a 4,000 gain the prior month.
Gag me on the political spin being attributed to this employment report. I am increasingly disgusted listening to politicians making the case that since the economy lost 600K in Dec 2008 and now only 85K lost, that that is a positive; better than in the past but would be employers are not hiring---period. Ask those that have lost jobs and can't find work if that is a plus. Yes, we can't keep losing 600K a month or we will all be on food stamps, but to paint the Dec report as a move toward the view that the economy is rebounding is, as is said, one can make anything out of data look like they want it too----economists and analysts do it daily. Christina Romer, White House economic person----smiling all the way; saying the job losses disappointing but still on the road. The Obama Administration is losing the battle, pumping almost a trillion dollars to save banks, spending a lot of taxpayers money to revive jobs that so far has been wasted. Another stimulus plan? WTF! Interest rates will explode if Obama continues to rack up increasing budget deficits.
At 9:30 the stock market opened weaker on the employment report, the bond and mortgage markets are the recipients with prices better but still very much in a bearish bias both fundamentally and technically. The DJIA opened -38, 10 yr note +9/32 at 3.79% -4 BP, mortgage prices +9/32 (.28 bp).
At 10:00 Nov wholesale inventories were expected to be down 0.3%; increased to 1.5% frm Oct. Sales in Nov were up 3.3%; the inventory to sales ratio fell to 1.14 months frm 1.17 months in Oct. The ratio is the lowest since July 2008 and the increase in inventories is the largest one moth jump since Oct 2003. The 10 yr note and mortgages fell more on the report with the 10 yr unchanged and mortgages +1/32 on the day and down 7/32 (.22 bp) frm 9:30.
Later this afternoon (3:00 PM), Nov consumer credit data; expectations are for another decline in consumer debt by $5.0B; consumer credit has been falling for eight months and likely will continue. Consumers are continuing circling the wagons while simultaneously banks are continuing to deny credit expansion and unwilling to lend.
Information provided by Rate Watch