Market Analysis

Bonds are up this morning with a continued trend of the 10 Yr Treasury outperforming the Fannie Mae and Freddie Mac mortgage-backed securities.  Stocks opened down slightly but selling pressure is increasing for stocks in mid morning trading.

The big news of the day for bonds was that there was not a surprise to the upside on the July Non Farm Payroll report.  Overall there was a decline of 131,000 jobs which on the surface appears much worse than the 83,000 expected decline.  However, there was not as significant a variance in the private sector component.  The private sector gained 71,000 jobs vs expectations of an 83,000 increase.  The public sector shed more jobs than expected with a 202,000 decrease, but 143,000 of those were census workers.  What is probably more troubling to investors was the revision downward to June's report in which the total jobs loss number was revised to a loss of 221,000 compared to an initial report of a 125,000 loss.  Private sector jobs gains for June were revised down to 31,000 from an initially reported increase of 83,000.  The jobless rate for July actually dropped to 9.5%, but that was due simply to people who dropped out of the "hunt" for jobs, not due to a decrease in the number of people out of work.