Stocks and Mortgage Bonds are both lower so far this morning after a much stronger than expected BLS Jobs Report.
Jobs Data
The Bureau of Labor Statistics (BLS) released its May Jobs Report, showing that the economy added 172,000 jobs—more than double the 85,000 economists had expected. Adding to the report's strength, payroll estimates for March and April were revised higher by a combined 93,000 jobs, bringing those totals to 214,000 and 179,000, respectively. The 3-month average is now 188,000, which is much stronger than what we have been seeing and aligns with the better trend we have seen from ADP and Revelio.
The breadth of job growth was a little better in this report, but still most of the jobs came from Government and Healthcare. Government added 52,000 jobs, most being local government education hires, while Healthcare and Social Assistance added 47,000. Those categories are not very telling on the strength of the economy, but Leisure and Hospitality did add 70,000, which was strong.
The Household Survey, where the unemployment rate comes from, showed that there were 149,000 job gains, which is much better than the three months in a row of job losses seen previously totaling 475,000. The labor force, which had been decreasing, increased by 83,000. For those reasons, the unemployment rate remained at 4.3%, but this time it was due to some strength.
Some of the internals within the Household Survey did show some weakness. Once again there were full-time job losses, totaling 79,000. There were 266,000 part-time job gains, so the source of jobs was not where you would want to see it. Additionally, those unemployed 27+ weeks and the median weeks unemployed both hit the highest levels since 2021, showing that once someone is unemployed they are often staying that way for longer.
The NFIB released some jobs data as well, showing that Job Openings that could not be filled fell 5 points to the lowest level since May 2020. This shows that they were filling positions and coincides with some of the stronger jobs data.
Over the next three months, however, their plans to hire fell 4 points to the lowest level since May 2020, signaling that there may be weaker job growth ahead.
News Next Week
Tuesday: Existing Home Sales, ADP Weekly Data
Wednesday: Mortgage Apps, Consumer Price Index, 10-year Auction
Thursday: Jobless Claims, Producer Price Index, 30-year Auction
Technical Analysis
Mortgage Bonds are moving lower and breaking under the 25-day Moving Average, which is a cautionary sign. If Bonds remain beneath this level, there is a ton of room to the downside until reaching support at 101.39.
The 10-year is up 6bp and breaking above resistance at 4.52%, with the next ceiling at 4.58%.
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