Unemployment rate drops to 6.7%

The payroll numbers seem to shock the market once a quarter. Two steps forward one step back. The unemployment rate dropped to 6.7% percent in December. The economy only added 74,000 jobs in December. Analysts had December’s number around 200K. Another 300,000 people fell off the roll skewing the unemployment rate. In November the unemployment rate was 7.00%. Questions abound on the street. What will the Fed do? The unemployment rate is approaching the Fed’s magic number 6.5%. Will the Fed back track from that number or will tapering continue as planned. What about Fed funds rate can it move higher before 2015? Is December an aberration caused by frigid weather? Some of these questions will be answered in the January report stay tuned. In mortgage land all is well. Mortgages are better by a .250 to .375 depending on coupon. The 10 year yield dropped to 2.878.