The employment report was not rate friendly. Unemployment came in at 6.3%, expected 6.6%. Non-farm payrolls rose 288k versus the expected 205k increase. We haven’t seen an increase of that magnitude in years. The prior two months data were both revised upward as well. The initial short-term reaction was a sharp sell-off pushing rates higher. The only positive part of the report for rates was the lower than expected hourly earnings which were unchanged versus the expected 0.2% increase.
Factory orders rose1.5% as expected and prices bounced back to recover a lot of the earlier losses. The Fed knows the housing market remains wobbly. Famed investor Warren Buffett recently expressed concerns and the Fed is still a major player in the MBS market. You can be sure the Fed had a role this morning buffering things to try to keep rates in check.