The Jobs Report and Confidence

In the past few weeks we have spoken a lot about confidence. Certainly, confidence has been the major influence behind the recent stock rally. It has also influenced the recent movements in rates and oil prices. If this confidence spills over to a hiring spree, then the chances of another rate increase by the Federal Reserve Board’s Open Market Committee likely comes sooner than later.
In other words, confidence begets confidence. For example, a bigger stock portfolio can move someone to purchase a home. Home purchases also can be spurred by fear. Existing home sales were up to start the year and one factor cited was the fear that rates could rise even further. For years, we have indicated that the time may come when the sale on money may be over. Keep in mind that we are not declaring this sale over, but certainly the recent confidence could help influence its demise.
It is interesting to note that interest rates spiked just after the election, along with the stock market rally. But since the first of the year, stocks have continued to shine, as rates have been fairly stable. Of course, the jobs report released this week could go a long way towards determining if this trend continues. A strong report which influences the Fed to act quickly, could create volatility. If the report is moderate, rates could remain calm. In a couple of days, we will know for sure

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