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We talk a lot about Non-Farm Payrolls data is a fair gauge of economy's direction. Friday, however, the data got trumped by terror.
Friday morning's Non-Farm Payroll report showed a loss of 35,000 jobs -- much stronger than the consensus estimate of -150,000 jobs created.
In addition, September's originally reported figure of +169,000 was revised higher to +211,000. Normally, a hot number like this would cause a mortgage bond sell-off.
At first, it did. Money moved into the stock market at the expense of mortgage bonds. Mortgage rates jumped higher at the open. And then came the reversal.
Driven in equal parts by light trading volume against an early market close, the 3-day Columbus Day weekend, and terror fears in Manhattan (which may have kept some traders from reporting to work, too), a flight-to-quality began sometime around mid-morning.
By the end of the day, mortgage rates had taken back the lost ground and then some -- despite really strong jobs data.
So what did we learn today?
We learned that terrorism (and threats of terrorism) still spooks investors. The abrupt turnaround in bond markets shows that market players believe that terrorism on American soil can damage the U.S. economy.
We draw this inference because bonds rallied big today, even as the Non-Farm Payrolls data completely outperformed its expectations.
Dan Green (NMLS #227607) is an active loan officer with Waterstone Mortgage. Email Dan ator call 513-443-2020.
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