Daily Market Update

Updated on May 7, 2021 10:09:44 AM EDT
Friday’s bond market has opened well in positive territory following much weaker than expected employment numbers. Stocks are reacting positively to the news also, pushing the Dow up 118 points and the Nasdaq up 129 points. The bond market is currently up 10/32 (1.53%), which with gains late yesterday should improve this morning’s mortgage rates by approximately .250 - .375 of discount point.

April’s Employment report was released at 8:30 AM ET this morning, revealing the U.S. unemployment rate stood at 6.1%, up from March’s 6.0% and higher than forecasts of 5.8%. Also, only 266,000 jobs were added back to the economy during the month, falling significantly short of the 950,000 that was expected. Both of these readings show the rebound in the sector that many had predicted is not happening yet. Those numbers are very good news for bonds and mortgage rates. They also should be a heavy burden on stocks, but we have not seen that yet.

There was data in the report that is concerning to bond traders. Average hourly earnings spiked 0.7% when it was predicted to remain nearly unchanged. Rising wages are a sign of wage inflation that can spread to other parts of the economy, making bonds less appealing to investors. Fortunately, the other two headline numbers appear to be having the biggest influence on this morning’s trading.

Next week brings us another batch of important economic data, including two inflation indexes and a key measure of consumer spending. In addition to some moderately important data, there also will be a couple of Treasury auctions that can influence rates. Activities don’t start until mid-week, meaning we should see the most movement in rates the latter days. Look for details on all of next week’s calendar in Sunday evening’s weekly preview.

Third Party Information and Links

As a service to our customers, our website makes information of third parties available.  Third party information is provided for general informational purposes only and does not constitute a recommendation or solicitation to purchase or sell any goods or services or make any other type of personal financial decision. In addition, the third party information is not intended to provide tax, legal, real estate or investment advice. We offer no guarantees as to the accuracy, security, or content of any third party information.