Bond Boost From Jobs Report Won't Last

In fact, since the peak in February, a decline of 104,000 jobs in the residential specialty trade contractor sector has been fully offset by an increase of 126,000 in the nonresidential sector. This odd fact is probably being influenced by the fact that a fairly large number of homes remain under construction. As homes are completed, the number of people employed in the sector will almost certainly fall.

Also boosting employment in the residential sector more generally is likely the current effort to reduce home inventories via sales and renting. The amount of property listings is high, and this is likely helping to sustain employment at real estate agencies, property management firms and the like.

Although temporary factors such as the high level of current listings, increased vacancy rates and unseasonable weather are all boosting employment in the downtrodden real estate sector, any future decline that occurs might be less than many now expect. This is primarily because there was a shortage of workers in the sector at housing's peak, particularly in the construction sector, and because of the offsetting influence of the nonresidential sector.

Bernanke Won't Help Bonds

The Federal Reserve is likely to water down the seemingly calming influences on the inflation front related to today's data on wages, the workweek and unemployment, deferring instead to the pace of job creation and other signs of accelerated growth of late.

This means that Fed Chairman Ben Bernanke is likely to give the bond market no new fodder for a rally when he delivers his semiannual monetary policy report to Congress on Feb. 14.