Today is the day every bond trader either hates or loves. It is the first Friday of the month. The day that the unemployment numbers are released for the prior month.

Historically, we have seen some of the largest swings occur in the bond market on first Fridays. It’s the day when traders have itchy fingers to either buy or sell their products.

Unemployment numbers have a huge impact on both the stock and bond market. The bond market is particularly sensitive to the unemployment data.

Why does this have such a big impact? Unemployment is one of the most basic indicators of either strength or weakness in any economy.

High unemployment is a sign of a weak economy, little or no growth, weak exports, weak currency value and little or no inflation. High inflation is the nemesis that the bond market fears most as it erodes the value of a fixed income security. Rates are typically low in a weak economy. Why? To help stimulate economic activity.

Low unemployment is a sign of a robust economy but the challenge is always to keep inflation in check. Interest rates are typically higher in boom times as a check/balance to keep inflation manageable.

This week, mortgage interest rates have inched up slightly but still remain in the 5′s.