April 1st, 2022 9:10 AM by Richard Sardella MLO.100007700/NMLS 233568
The March unemployment rate dropped to 3.6% from 3.8% in Feb (expectations 3.7%); non-farm jobs 431K, (expectations 490K, Feb revised to 750K frm 678K), private jobs 426K (expectations 458K, Feb revised to 739K frm 654K). Average hourly earnings +0.4% as expected frm 0.0% in Feb; annual +5.6% against 5.5% expected and up frm 5.2% in Feb, revised from 5.1%. Labor participation 62.4% as expected. Big revisions to Feb data. The reaction sent the 10 yr yield to 2.43% frm 2.33% yesterday. The 2/10 spread has inverted, making the entire curve inverted.
The weaker jobs in March, offset by sizeable upward revisions in Feb. The increase in average hourly earnings will provide the Fed with reasons to increase the FF rate by 50 bps in four weeks at the next FOMC meeting. Even prior to this report Powell made it clear a week ago the Fed must move more rapidly in tightening to slow inflation that is continuing t increase and negating increases in wages as prices increase. President Biden opening the strategic oil reserve adding 180 mil barrels of oil over the next six months lauded as a relief of higher gas prices.
Treasury futures began slipping after yesterday's close, accelerating their retreat as the night went on. The overnight selling caused a brief inversion of the 2/10 spread. In overnight trading the release of a big batch of data from Europe and Asia. China's Caixin Manufacturing PMI returned into a contraction for the first time since January while the eurozone's yr/yr CPI rate accelerated to a fresh record of 7.5% in the flash reading for March, frm 5.9% in Feb.
At 9:30 am ET the DJIA opened +88 after declining 550 yesterday, NASDAQ +49 frm -222 and S&P +15 frm -72 yesterday. FNMA 4.0 30 yr coupon -36 bps and -53 bps frm 9:30 am yesterday. The 4.5 coupon at 9:30 am -56 bp and -27 bps frm 9:30 am yesterday.
At 10 am March ISM manufacturing index, expected at 59.0 declined to 57.1 frm 58.6 in Feb.
More jobs, higher wages and a drop in the unemployment rate return the rate markets to inflation concerns after some improvement the last four sessions. Inflation fears never ebbed, just paused until more data was released.
PRICES @ 10:00 AM
10 yr note: 2.44% +10 bp
5 yr note: 2.57% +10 bp
2 Yr note: 2.44% +10 bp
30 yr bond: 2.52% +7 bp
Libor Rates: 1 mo 0.455%; 3 mo 0.966%; 6 mo 1.472%; 1 yr 2.126% (3/31/22)
30 yr FNMA 4.0: 101.53 -36 bp (-55 bp from 9:30 am yesterday)
30 yr FNMA 4.5: 103.05 -56 bp (-27 bp from 9:30 am yesterday)
30 yr GNMA 4.0: 101.42 -37 bp (-47 bp from 9:30 am yesterday)
Dollar/Yuan: $6.3639 +$0.0239
Dollar/Yen: 122.92 +1.25 yen
Dollar/Euro: $1.1043 -$0.0023
Dollar Index: 98.64 +0.33
Gold: $1935.80 -$18.20
Bitcoin: 45,500 -260
Crude Oil: $10.23 -$0.05
DJIA: 34,738 +60
NASDAQ: 14,224 +4
S&P 500: 4532 +2
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.