Morning Report: Strong jobs report

Vital Statistics:

 

Last Change
S&P futures 3340 -3.25
Oil (WTI) 50.38 -0.32
10 year government bond yield 1.61%
30 year fixed rate mortgage 3.68%

 

Stocks are lower this morning as investors sell winners. Bonds and MBS are up.

 

Jobs report data dump:

  • Nonfarm payrolls up 225,000
  • Unemployment rate 3.6%
  • Average hourly earnings up 3.1% annually
  • Labor force participation rate 63.4%
  • Employment-population ratio 61.2%

Overall, a strong report. Certainly payrolls were way above the 158,000 expectation. Construction gained workers, which comports with what we have been hearing from the builders – that they are ramping up for 2020. Wage growth and payroll growth remain strong, and more people are entering the workforce, with the participation rate up and a rise in the employment-population ratio.

 

The NAHB notes that 63 million households are unable to afford a $250,000 home. Interesting stat from the piece: “A previous post discussed the often-cited estimate that a $1,000 increase in the price of a median-priced new home will price 158,857 U.S. households out of the market for the home.  A second post discussed the related estimate that a quarter point increase in the mortgage rate will price out 1.3 million.”

 

On the other side of the spectrum, Redfin notes that luxury home prices are rising again as interest rates fall. “Demand for luxury is improving. That’s showing up primarily in an increase in sales right now, but it’s also putting some slight upward pressure on prices,” said Redfin chief economist Daryl Fairweather. “We’re ending the year in a much better position than we started, which is a good sign for 2020. I expect price growth to return to at least 3% to 5% by spring.”

 

 

Author: Brent Nyitray

In the physical sciences, knowledge is cumulative. In the financial markets, it is cyclical

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