Today's Economic news

The Labor Department reported 88,000 new jobs created in April, which was slightly below official expectations.

Some other highlights of the report - the April Unemployment Rate rose slightly to 4.5%, matching expectations. Average Hourly Earnings were reported slightly lower than expected at 0.2%. The weaker read on Hourly Earnings was good news for Bonds as it suggests wage pressured inflation is easing. There were also downward revisions which removed 26,000 jobs from the previous two months reports. Overall, the Job Report suggests the strong labor market is softening a touch and wage based inflation pressure is moderating.

Fed Chairman Ben Bernanke has to be smiling this morning as recent reports suggest the Fed is doing a great job in handling the economy, which shows moderate growth and inflation pressures easing. The softer than expected 0.2% reading on Hourly Earnings was welcome news this morning, as the Fed recently expressed some concern that labor costs may rise more than expected. As we all know the recent Core Personal Consumption Expenditure Price Index (PCE) showed a year over year reading of 2.2%, which is much closer to the Fed's target zone of 1 - 2%. Based on the recent economic data, the Fed must be thinking about a cut in the 2nd half of 2007, which is also in line with our Mortgage Market Forecast for 2007, which you can find in the Resources section of the website. In light of the recent news, it will be especially interesting to hear the tone of Fed's Monetary Policy statement at the Fed Meeting next Wednesday at 2:15pm ET.