As you are probably aware by now, the Labor Department reported this morning that the economy lost fewer jobs in August than most economists had been expecting. The government said overall employment fell by 54,000 jobs last month while the nation's jobless rate edged up to 9.6% from the 9.5% month earlier mark.
In addition, the data wonks at the Labor Department revised the June and July figures to show 123,000 fewer jobs were lost than previously reported. The detail of the report showed that the private sector continues to create less than 100,000 new jobs a month - a pace far too weak to absorb the millions of workers who have lost their jobs in the worst recession since the 1930's.
Even so, mortgage investors had priced in much darker news from the labor sector than the actual data revealed - creating the rather sharp sell-off in this morning's mortgage market.
Looking ahead to next week the holiday shortened calendar is completely void of anything but second tier economic data - but that doesn't mean it will be a completely boring trading period. Uncle Sam will be conducting a three-part auction from Tuesday through Thursday. He'll be selling 3- and 10-year notes together with a bundle of 30-year bonds. The 10-year note and 30-year bond auctions may require Uncle Sam to "sweeten-the-pot" a little bit to attract the required capital. If so "pot sweetening" process will likely put some slight upward pressure on mortgage interest rates.
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