Rates Hold After Unemployment Drops But Job Creation Questionable (CHARTS)

Rates rose then recovered after this morning’s BLS report showed the economy added 120k non-farm payrolls in November. Plus October was revised from 80,000 to 100,000 new jobs created and September was revised from 158,000 to 210,000. This figure doesn’t count actual people, it counts how many companies opened or closed, then uses that data to estimate the number of jobs gained or lost. Unemployment dropped to 8.6% from 9% according to a different part of the jobs report called the ‘Household Survey’ which counts people. CHARTS BELOW.

Rates rise when mortgage bonds (MBS) sell, and today’s trend continues a theme all week: mortgages sell sharply right after ok economic releases and EU aid news, then recover. The 3.5% Fannie Mae coupon—a key benchmark lenders use to price consumer rates—was down 38 basis points and is now up 6 basis points. Long trading session ahead, but so far impending EU trouble and potential MBS-focused QE3 have tempered—and reversed—selloffs to keep rates from spiking. If this morning’s MBS levels hold, my outlook for rates net up slightly on the week will also hold. More in WeeklyBasis recap/outlook tomorrow.