October 5th, 2018 9:06 AM by Richard Sardella MLO.100007700/NMLS 233568
September employment data is full of revisions, having fallen to 3.7%, the lowest unemployment rates since Dec 1969. It now represents a 60 -r low. For non-farm jobs, the consensus was for 180K new jobs, but after the ADP jump on Wednesday, the whisper numbers were thought to be better: non-farm jobs as reported +134K but August revised from 201K to 270K. Private jobs expected +175K were up 121K, but August revised, from 204K to 254K. Average hourly earnings were in line, +0.3% and yr/yr +2.8% down from 2.9% in August. The labor participation rate remained unchanged from August at 62.7%. Manufacturing jobs in September were thought to be +10K . As released, they added +18K and August revised from -3K to +5K. All in all, the report was strong and sent interest rates higher on the initial reaction. US stock indexes improved slightly.
At 9:00 am EST the 10 yr, after climbing to 3.23%, +4 bps, fell back to 3.21%, +2 bps. MBS prices on the initial reaction to employment dropped 11 bps, but by 9 am ET were down 8 bps from yesterday’s close.
At 9:30 am the DJIA opened +19, the NASDAQ was down -9, tand he S&P added +1. The 10 yr stood at 3.22%, adding +3 bps.
Headlines from news agencies; Job growth declines in September. True, but not accurately reflecting the reality. The big revisions higher in August taken together still show major increases in jobs. Wonder where all these jobs come from and where the workers come from? Looks like everyone over age 15 has a job, yet next month there will be another increase in jobs. Most of our readers may not have been born in 1969 or were teens; Jobs abound, and minimum ages are on the increase. The stock market is feeling a little nervous as interest rates are increasing rapidly this week.
Trade issues are still alive; European Union ministers debated today what to offer the United States to ease trade tensions and avoid a return to a tit-for-tat tariff conflict that could hit EU cars. Trump agreed in July to hold back on a threatened 25-percent import tariff on EU cars while the United States and Europe discussed removing trade barriers, including duties on industrial goods.
Technically the 10-yr is moving into near term into overbought conditions. Even the potential of another consolidation trade next week after the huge increase this week for any improvement will be minor and will not change the current bearishness of the market.
PRICES @ 10:00 AM
10 yr. note: -7/32 (22 bp) 3.21% +3 bp
5 yr. note: -2/32 (6 bp) 3.07% +2 bp
2 Yr. note: -1/32 (3 bp) 2.89% +1 bp
30 yr. bond: -19/32 (59 bp) 3.38% +3 bp
Libor Rates: 1 mo. 2.280%; 3 mo. 2.409%; 6 mo. 2.623%; 1 yr. 2.956% (10/4/18)
30 yr. FNMA 4.0: @9:30 100.11 -16 bp (-22 bp from 9:30 yesterday) 4.5 102.47 -11 bp (-11 bp from 9:30 yesterday)
15 yr. FNMA 4.0: @9:30 101.63 -6 bp (-5 bp from 9:30 yesterday)
30 yr. GNMA 4.0: @9:30 100.84 -9 bp (-16 bp from 9:30 yesterday) 4.5 102.57 -1 bp (-8 bp from 9:30 yesterday)
Dollar/Yen: 113.86 -0.04 yen
Dollar/Euro: $1.1531 +$0.0016
Dollar Index: 95.60 -0.16
Gold: $1206.60 +$5.00
Crude Oil: $74.36 +$0.03
DJIA: 26,606.53 -20.95
NASDAQ: 7854.48 -25.03
S&P 500: 2901.30 -0.31
Richard Sardella has been actively managing and providing services in the mortgage industry for over 27 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.
All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.
MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.