Mortgage investors returning from the Thanksgiving Holiday are hopeful the Fed's planned purchase of $39 billion worth Treasury debt obligations this week will help support a market pounded by last week Wednesday's heavy selling. The price drubbing in the credit markets just before the holiday break was triggered in large part by a much stronger than expected weekly jobless claims number.
Even though last week's initial claims data fell outside of the survey period for Friday's much more important November nonfarm payroll statistics - mortgage investors will take turns scaring the heck out of each other with "whisper" numbers sharply higher than the expected 145,000 job gain already priced into the mortgage market.
If Friday's headline nonfarm payroll number posts a reading of 150,000 or more and/or should the national jobless rate slips to 9.5% or less - look for stocks to rally at the expense of higher mortgage interest rates. A softer than expected headline number and/or a jobless rate of 9.7% or higher will likely put a pretty sizable dent in stock prices while simultaneously restoring the shine to the prospects for notably lower mortgage interest rates.
For what it is worth -- data suggests Friday's nonfarm payroll will be stronger-than-expected. A stronger-than-expected November nonfarm payroll report will favor the stock markets at the expense of fractionally higher mortgage interest rates. Heads up.
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