Happy Friday. Well the last of the jobs data came out today and it was a HUGE miss. Non-farm Payrolls were expected to be 180K but came in at 151K. This is quite the about-face from last month and from the ADP Private Payrolls on Wednesday. Additionally, Average Hourly Earnings were only up .1% vs. estimates of .2% and July Factory Orders were up 1.9% vs. estimates of 2% and previous of -1.5%. The Non-farm Payrolls number does not justify a rate hike this month. We will have to see how the rest of the data plays out between now and September 21st but if it's anywhere near as tame as this morning's data, I don't see how the Fed could justify raising the Fed Funds Rate. Let's not forget that the August ISM Manufacturing Index at 49.4 is contractionary which would also be an argument against a rate hike.
Next week we get the ISM Non-manufacturing Index (service sector) on Tuesday which is very important. The Fed Beige Book is released on Wednesday and Wholesale Inventories is on Friday. The following Thursday and Friday will give us the PPI and CPI respectively and the Michigan Consumer Sentiment Index. We should have a really good idea at this point of what the Fed will do the following Wednesday.
Today, however, traders are reacting a bit funny in some ways only because with weak data like this you might think that they would be buying bonds because they could be fairly confident that the Fed is not going to raise rates. The issue is that money is flowing into the equity markets pushing the stock indices higher and putting some pressure on bond prices with the FNMA benchmark bond now down 13 basis points at 103.59 after closing up 10 basis points yesterday at 103.72. I would continue to float for now since we might see some buying next week, especially if the data continues to disappoint. If you have a loan closing within 15 days, go ahead and lock since rates remain at extremely low levels. Make it a great day and a better weekend.