CHM Blog

The unemployment rate for August thought to be unchanged from July at 3.5%, increased to 3.8%. NFP jobs expected +170K increased 187K but July revised from 187K to 157K. Private jobs estimates +147K increased 179K but like July private jobs revised from 172K to 155K. Average hourly earnings month/month forecasts were +0.3%, as reported +0.2%, year/year estimates 4.4% declined to 4.3%. The labor participation rate at 62.8% increased from 6.6% in July. New hires totaled less than 200,000 for the third month in a row and added to mounting evidence of a cooling labor market. In June and July, hiring rates finally returned to pre-pandemic levels, at just under 200,000 per month. The unemployment rate the highest in 18 months; workers are coming back at stronger levels than many economists were expecting, the increase in the labor participation rate increase softens the increase in the unemployment rate.

Fed officials have been saying the increase in hiring needs to slow to 75,000 to 100,000 new jobs a month to ease the worst labor shortage since World War II and help reduce inflation. The July JOLTS job openings reported Tuesday said the new openings declined to the lowest level since April 2020. Those are facts, but jobs still increasing at a rate that will bother the Fed. There will be no rate increases from the FOMC when it meets in three weeks. The report confirms the market's thinking that the Fed won't be raising rates again. There are clear signs of softening in the employment situation, including a decline in temporary positions, an uptick in the percentage of workers unemployed for 27 weeks or more, and a pickup in the U6 unemployment rate, which accounts for underemployed workers.

The knee-jerk initial reaction to the increase in unemployment sent the 10 year note down to 4.04% -7 bps, it lasted 5 minutes before the note inched back to 4.18% +7 bps from yesterday’s close.

At 9:30 am the DJIA opened +211, NASDAQ +99, S&P +30. 10 year at 9:30 am 4.10% -1 bp. FNMA 6.0 30 year coupon at 9:30 am -2 bps from yesterday’s close and +4 bp from 9:30 am yesterday.

At 9:45 am August PMI manufacturing index expected at 47.0 increased to 47.9.

At 10 am August ISM manufacturing index at 47.6 from 46.4 in July and better than 46.8 expected. July construction spending increased 0.7% from 0.6% in June and better than 0.5% forecasts, year/year +5.5% from +4.6% in June.

The initial reaction to the August employment rate drove the 10 year to 4.04% -7 bps, as noted it lasted less than 5 minutes then began to increase 4.15% +4 bps.

PRICES @ 10:00 AM

10 year note: 4.18% +7 bp

5 year note: 4.31% +6 bp

2 year note: 4.83% -4 bp

30 year bond: 4.30% +8 bp

30 year FNMA 6.0: @9:30 am 100.24 -2 bp (+4 bp from 9:30 am yesterday)

30 year FNMA 5.5: @9:30 am 98.90 +17 bp (+14 bp from 9:30 am yesterday)

30 year GNMA 5.5: @9:30 am 99.15 +17 bp (+14 bp from 9:30 am yesterday)

Dollar/Yuan: $7.2486 -$0.0097

Dollar/Yen: 145.34 -0.20 yen

Dollar/Euro: $1.0852 +$0.0008

Dollar Index: 103.48 -0.14

Gold: $1972.90 +$7.00

Bitcoin: 25,943 -53

Crude Oil: $84.90 +$1.27

DJIA: 39,926 +205

NASDAQ: 14,057 +22

S&P 500: 4526 +18

Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 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.