Friday the Labor Department released the Jobs Report and 598,000 jobs were lost in January, worse than expectations of 540,000 jobs lost. These mounting job losses are the worst seen since 1974. About 3.6 million jobs have been lost since December 2007. The Unemployment Rate is now at 7.6%.
Normally bad news translates into improved bond prices as investors move their money into bonds as a safe haven in times of economic uncertainty. While rates have stayed pretty stable we haven't seen them come down over the past week even though the bad news would normally have a positive affect on rates.
It is my opinion that bond prices, and thus interest rates, will be trading in a sideways pattern until Congress puts the final touches on the Stimulus package and Wall Street has time to evaluate the impact those funds will have on the economy. Once the stimulus package has been reviewed I believe we will see rates move in one direction or the other.
There is still talk that the Fed will be more active in purchasing mortgage bonds and that could drive rates down a little from where they are, but I believe that the 4.5% rates we saw in early January are in the past and not very likely to reemerge any time soon.
If you are one of the casualties of the mounting job losses I wish you all the best in your search for a new job. For the sake of our country I hope that Congress gets this stimulus package right this time.
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