Not only was this morning's employment data stronger than expected, but it would probably have been even stronger if not for the weather effect. As preposterous as this sounds to those hoping for lower rates and fed up with what sounds like an "excuse" for recently lackluster data, there are some compelling reasons to give it some consideration. I discussed those earlier this morning: Breaking Down Weather Implications in Stronger Employment Report.
Even before that, members of the MBS Live community were already discussing it in real time on the Dashboard, helping get to the heart of the complex underlying data.
Matt Hodges, Charlottesville Sales Manager at Presidential Mortgage Group, noted "the extrapolation is that if so many people worked less than their projected number of hours during the payperiod including 2/12 (Eastern snow storm), then fewer jobs were counted by businesses, but will likely be counted in future months."
Beyond the immediate implications for today's payroll numbers, we discussed other data in the report that showed just how dramatic an effect the weather had on workers reporting reduced hours. Sung Kim, an Originator at McLean Mortgage Corp, was able to quickly distill the following chart for the community, explaining why bond markets were suffering in the process: "6.8mm people blamed weather. This validates it as a reason for Econ weakness and weather is transitory."
Bottom line: based on today's report, and the special questions regarding weather, NFP would have been even higher during a more average winter. Naturally, bond markets didn't like that, although they've been holding their ground and bouncing back a bit since hitting their weakest levels earlier today.
The stock market is helping in that regard. S&P's sold off more than 15 points peak to trough. That's a much sharper mover lower than the analogous move seen in Treasury yields, but if we just look at 9:30am forward, the direction of the movement is highly correlated:
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