Mortgage bonds have been trading in the positive this morning, helped by some bond friendly economic news. Initial Jobless Claims came in at a 26 year low at 626,000, which was worse than estimates of 580,000. This does not paint a very pretty picture going into tomorrow’s much watched Jobs Report, and there is little doubt that the numbers will come in very high. Couple this with a rising unemployment rate, and there is a real potential for a jump in bond pricing after all of the losses we have suffered in the past week or so.
Also giving mortgage backed securities this morning is an increase of 3.2% in 4th Quarter Productivity, though this is being tempered by a drop in Output in the 4th Quarter of -5.5%. This is the largest decline in 26 years, and it is reflective of the cuts in both hours and employment numbers. It appears that the few are doing the work of many these days.
Given the dismal employment news, and the general malaise of the economy, we are floating into tomorrow’s Jobs Report, with expectations of gaining back some of the price deterioration from recent weeks. Should anything change, we will let you know.
