Employment Neutral to Interest Rates

The monthly jobs report was fairly weak with 134,000 new jobs–although everyone is blaming it on the hurricane in the southeast.  The unemployment rate fell to 3.7% from 3.9%.

The most important part of the report is the wage component and average hourly wages rose 2.8% year over year which was just below last months 2.9% year or year increase.  This should be neutral to interest rates, but in the markets perverse way the 10 year treasury is up a few basis points on the news.

We would guess that we will see some digestion of recent losses in preferreds today and assuming no black swan news we will see some modest increases in pricing next week–we shall see.