What, No Taper Tantrum?

  • December 6, 2013

tantrumtoon

It’s Jobs Friday! The employment situation report was released this morning. Jobs Friday is known for being a very volatile day in the bond market. This would seem to be especially true after Janet Yellen claimed the taper timeline was dependent, at least somewhat, on the employment rate. Last time employment data beat economists’ forecast the market had a taper tantrum. That’s right, investors got uncomfortable, lost it for a second and the market sold off significantly. Today it looked like it would be a repeat performance…but it wasn’t.

  • In this morning’s report, the U.S. unemployment rate dropped to 7 percent in November, a five year low. Now that could have been something to yell about. After we all counted to 10, we cooled off, and the market started to bounce back.
  • Nonfarm payrolls expanded, more than expected at 203,000 jobs last month. We put ourselves in time out for a few minutes to think about that.
  • Charles Plosser, the president of the Philadelphia Fed, stated today the payrolls data reinforced his view that the Central Bank should begin to taper its bond buying program. Comments like this could give us insight to future economic policy changes. Tapering could mean higher rates for mortgage consumers. Well, he was pretty passionate during his speech.

However, after all of that the market rebounded and we regained all of the morning losses.  This kept rates stable, if not slightly better on the day. So, no prolonged taper tantrum? Not this time…well, there is always next month. Have a good weekend.

-By Lindesy Fediuk, Quicken Loans Capital Markets Analyst

 

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