We’re On Shaky Economic Ground

I don’t really need to tell anyone that stock volatility has been off the charts. While they have moved lower over the past few weeks, they have also seen several sharp moves back to the upside.

It’s a regular rollercoaster.

Treasury bond volatility, however, was relatively steady up until last week.

Long-term bond yields peaked in early November at 3.46% and have since fallen without any sort of higher retracement in sight. Although last Friday’s Treasury bond action changed that recent trend. The long-term Treasury yield dropped to 2.9% Thursday and rebounded to 2.96% in short order.

Yesterday, the long bond stood at 3.02%.

As I noted many times over the past year, the housing sector has faltered. The increases in mortgage rates, rising and falling prices, and the decline in sales are to blame for that.

November new home sales data wasn’t released due to the partial government shutdown. But the existing November sales showed a surprising swing to the upside on the month. On the year though, sales fell 7%.

A decline in home prices should follow. Especially if other economic indicators show weakness.

All About the Jobs

According to the Challenger jobs report last Thursday, the number of construction layoffs announced in December closely mirrored job losses following the Great Recession in February of 2017.

And despite the government shutdown, the December employment report was released last Friday. The Labor Department seems to remain funded, for now…

Consensus analyst forecast no change in the unemployment rate of 3.7%, with a slight increase in new non-farm jobs and a healthy increase in hourly earnings of 0.3%.

The jobs increase to 312,000 was a big surprise. The initial expectation of 184,000 increase was blown out of the water! Wages also ticked higher than the expected 3%, rising 3.2% on the year.

Participation rates also increased above 63% for the first time since early 2014. The only bad news in this report is that the unemployment rate jumped to 3.9% from 3.7% in December.

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