Employers added 94,000 jobs in November, but a slowdown in job creation in recent months fueled speculation that the Federal Reserve will make a modest cut in interest rates next week. The Labor Department said the national unemployment rate was unchanged at 4.7 percent in November, but it substantially revised its estimates for job growth in the two prior months to show a less vigorous pace of hiring. The department revised its estimate for October job creation to 170,000 instead of 166,000 it reported a month ago but slashed its estimate for September new jobs to 44,000 from 96,000 — a net decrease of 48,000 over the two months. That made the revised September job-creation figure the weakest monthly gain in more than 3-1/2 years, since 31,000 jobs were added in February 2004, department officials said.
Nonetheless, the November new jobs total came in slightly ahead of forecasts by Wall Street economists for 90,000 jobs – neither “too hot, nor too cold”, according to Hank Smith, Chief Investment Officer with Haverford Investment.
This news makes a .25bps cut very likely when the Fed meets again on Tuesday. This is great for HELOCs and some ARMs, but long term securities such as the 30 year fixed 5.5% FNMA bond have seen prices drop 34bps yesterday in anticipation of today’s report and they are currently down another 44bps. Rate sheet pricing today will be notably worse than yesterday, and combined with some negative technical signals we have probably hit the interest rate bottom for at least a while.
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