Market awaits critical jobs report
June 28, 2009 by admin
The stock market enters a critical junction for the year this week, the year will officially be in the third quarter and a critical jobs report will be released to the market. The stock market has drifted lower in June, following a thirty five percent run up from March through May as investors have grown more cautious on the economic outlook. Early june saw a spike to home mortgage rates as the bond market rallied sharply, pushing yields past the 4% level for ten year bond and driving mortgage rates up near six percent. The last two weeks of the month, investors have grown more cautious, spurred by a report from the World Bank and a number of guidance reports from the market, as a result the stock market has shed about 600 points and the ten year bond has dropped below 3.7%, driving mortgage rates into the mid five percent range. The FOMC met this week and did little to provide direction for investors who were looking for assurances of their role in continuing to stabalize the housing market by purchasing mortgage backed loan securities, another sign that the government is hopeful the freemarkets will begin to return to normal and work their own way out of the current challenges.
This weeks job report will be analyzed from every possible angle prior to and after the release of the data on Thursday. Most economists are universal in their belief that the current economic recession will not end until the market has stopped shedding jobs. The month of May, showed favorable progress in this regard as only 370,000 job losses were reported, well below most experts predictions. The improved numbers for May will add pressure to the data for June. Since the official start to the recession, over six million jobs have been lost and the unemployment rates is hovering close to the ten percent range.
According to a survey from CBSMarketwatch, the market is predicting job losses to again exceed the 300,000 level, pushing the national unemployment rate to 9.6%. The mounting job losses have been felt in every area of the economy. A study from Moodys last week, showed significant increases with credit card defaults. Home foreclosures are at their highest levels and the national manufacturing industry has seen a number of Bellwether companies (GM, Delphi, Daimler Chrysler) all head into bankruptcy.
The world economy will all be closely following the data on Thursday. The United States is one of the world’s largest consuming nations, and the fallout from the sub prime mortgage fallout and credit crunch have impacted businesses across the globe. The government’s two trillion dollar stimulus program was put in place to help create jobs, with a renewed focus on energy and infrastructure. The government is hopeful that job losses will begin to turn their course as confidence returns to the market and public and private companies focus on growing their business for future success.