Morning Report: Strong Jobs Report

Vital Statistics:

  Last Change
S&P futures 4,423 3.2
Oil (WTI) 69.64 0.65
10 year government bond yield   1.28%
30 year fixed rate mortgage   2.96%

Stocks are higher this morning after a better-than-expected jobs report. Bonds and MBS are down.


The economy added 943,000 jobs in July, according to the BLS. This was higher than expected, and much better than the ADP jobs reading on Wednesday. The unemployment rate fell from 5.9% to 5.4%. The number of employed increased by 1 million, while the number of people who were unemployed fell by 800k. The labor force participation rate ticked up to 61.7%.

The report notes that the payroll increase may have been distorted by seasonal adjustments for education. COVID issues meant there were fewer than normal June layoffs, which exaggerated the July payroll increase.

Average hourly earnings increased 0.4% MOM and 4% YOY. I suspect the wage increases will be more persistent than people are thinking, and the bargaining power may be in the hands of workers for the first time in decades. This will support inflation, although wage-driven inflation is exactly what the Fed wants to see.


The Delta variant of COVID has caused companies to push back the return to the office. Apple was the first to push it back, and now we have delaying the return until next year. Wells has also delayed the return by a month. That said, office REITs like SL Green say that most employers are targeting a post-Labor Day return.


Servicer satisfaction increased during the pandemic. I guess forbearance makes borrowers happy. Rocket, Huntington and Guild were the favorites.



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