With a drop in the labor force participation rate to 63.2%, its lowest level since 8/78, the creation of only 169,000 net new jobs in August and revisions subtracting 74,000 new jobs in June and July, it’s now a toss-up whether the Fed begins tapering in September. If they do, expect the Fed to reduce its Treasury purchases by just $10 billion with mortgage backed securities purchases remaining unchanged.
Tag Archives: mortgage-backed securities
Laboring On
Last Friday’s mediocre employment report gives the Fed (meeting this week) ample reason to continue buying Treasuries and mortgage-backed securities at the rate of about $80 billion/month for the foreseeable future. As for the employment report, average hourly earnings rose only 1.7% over the past 12 months, while the CPI increased 2.2%! The workweek remained unchanged at 34.4 hours. September and October employment gains were collectively reduced by 49,000.