There wasrnsome talk in the media and among analysts of whisper numbers in the 110-150krnrange.  Moreover, human nature as well as the nature of financial marketsrnfavored a lower number  after an incredibly strong report previously andrnan incredibly weak report before that.  Today was to be the warm bowl ofrnporridge in that regard, and it turns out forecasters did a great job ofrnhoning in on that warmness at 170k vs the more emotional consensus around 130k.</p

It bears brief mention that yesterday’s anomalous gyrations drew morernthan a few comments that wondered if something about the NFP outlook hadrnchanged for some reason.  Any sort of “leak” from the BLSrnhas been and continues to be highly unlikely.  But even if discussion ofrnpotential leaks was only in jest, when we see a massive bond market rally thernday before NFP, in high volume, and decidedly lacking in satisfyingrnexplanations, it’s enough to cause some doubt about any potential tiesrnto the upcoming data.  </p

That may have helped facilitate some of yesterday’srnstrength, or rather, may have sparked doubts that helped yesterday afternoonrnfrom having a more sincere correction back to a pre-NFP defensive stance. rn”Somewhat lulled into a false sense of security by an enigmaticrnmega rally the day before NFP,” I might say.  </p

Regardless of the ‘whispery’ expectations vs economists expectations, thernnumbers are the numbers, and they’re now building a clearer picture of arnsluggish, but stabilizing labor market.  Please understand that the Fedrnwill taper bond buying if we can merely maintain this current pace in laborrnmarkets. The media chatter about a 200k NFP benchmark for tapering is not a safe assumption. </p

The notion of a 200k benchmark does indeed have legitimate basis, especially in speeches from Chicago Fed’s Evans.  But as we’ve discussed at length, both in the MBS Commentary and on MBS Live, ANY of the Fed’s thresholds, explicit or implied, are never going to be hard and fast lines in the sand.  </p

Fed governors and even Bernanke may have mentioned the payrolls-based thresholds in speeches, but they’ve been even more clear to point out that there is no clearly delineated line in the sand from one economic metric.  What would it matter if job creation stayed at 175k if other economic metrics were stable to improving?  Incidentally, that’s entirely possible according research out yesterday from the Chicago Fed: </p

“For the unemployment rate to decline, the U.S. economy needs to generate above-trend job growth. We currently estimate trend employment growth to be around 80,000 jobs per month, and we expect it to decline over the remainder of the decade, due largely to changing labor force demographics and slower population growth.” </p