Rates are down this morning on a huge mortgage bond rally (FNMA 4% coupon +65 basis points) following a BLS report showing the economy only added 18,000 non-farm payrolls in June, fewest in nine months, plus April and May were revised down 44,000. Non-farm payrolls doesn’t count actual people, it counts how many companies opened or closed, then uses that data to estimate the number of jobs gained or lost.
A less-reported component of monthly BLS jobs reports counts actual people using telephone surveys, and this ‘Household Survey’ reported that employed persons plummeted 445,000. The unemployment rate is calculated using this data, and that’s why the unemployment rate rose from 9.1% to 9.2%. This is an awful jobs report all around, and the only good news is that this bad news helps rates.