April 5th, 2023 9:15 AM by Richard Sardella MLO.100007700/NMLS 233568
At 8:15 am ET this morning ADP released its private jobs report. The forecasts called for job growth at 200K, as reported 145K and Feb revised from 242K to 261K. Prior to the data the 10 year note traded at 3.31% -4 bps, at 9 am 3.30% -5 bps.
Cleveland Fed Pres. Loretta Mester championing high rates, saying the bank should move its benchmark rate above 5% this year and hold it at restrictive levels for some time to quell inflation, with the exact level depending on how quickly price pressures ease. Her comment clouds the issue of a Fed pause in May that had been gaining momentum recently. Adding to her remarks, New Zealand’s central bank increased its base rate by 50 bps today. There are no Fed speakers on the slate today, with James Bullard’s remarks tomorrow the only comments due before Easter break.
Weekly MBA mortgage applications declined last week; the composite index -4.1%, purchase apps -3.5% and re-finances -5.4%.
Feb US trade deficit higher than forecasts at -$70.5B with estimates at -$68.7B.
At 9:30 am the DJIA opened +3, NASDAQ -43, S&P -6.10 year note 3.31% -4 bps. At 9:30 am MBS prices lagged the 10 year with not much change from yesterday. FNMA 5.5 30 year coupon +3 bps and +50 bps from 9:30 am yesterday, the 6.0 coupon -2 bp and +38 bps from 9:30 am yesterday.
At 10 am March ISM services sector weaker than estimates. Registered 51.2 percent, 3.9 percentage points lower than February's reading of 55.1 percent. The composite index indicated growth in March for the third consecutive month after a reading of 49.2 percent in December, the first contraction since May 2020 (45.4 percent). The Business Activity Index registered 55.4 percent; a 0.9-percentage point decrease compared to the reading of 56.3 percent in February. The New Orders Index expanded in March for the third consecutive month after contracting in December for the first time since May 2020; the figure of 52.2 percent is 10.4 percentage points lower than the February reading of 62.6 percent. The Supplier Deliveries registered 45.8 percent, 1.8 percentage points lower than the 47.6 percent recorded in February. In the last two months, the index has reflected the fastest supplier delivery performance since April 2009, when it registered 45.5 percent. (Supplier Deliveries is the only ISM® Report On Business® index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.)
ADPs less than expected job growth tied to yesterday’s Feb JOLTS job openings that surprised with its big decline (9.931 mil vs. estimates of 10.4 mil) supports the idea that the employment sector is slowing. Good news for interest rates. Fed’s Mester though remarked rates will have to increase and stay high longer than she thought a month ago. Not so good.
PRICES @ 10:00 AM
10 year note: 3.27 -7 bp
5 year note: 3.30 -8 bp
2 year note: 3.70 -14 bp
30 year bond: 3.55% -5 bp
Libor Rates: 1 month 4.871%; 3 month 5.219%; 6 month 5.337%; 1 year 5.296% (4/4/23)
30 year FNMA 6.0: @9:30 am 102.30 -2 bp (+38 bp from 9:30 am yesterday)
30 year FNMA 5.5: @9:30 am 101.38 +3 bp (+50 bp from 9:30 am yesterday)
30 year GNMA 5.5: @9:30 am 101.25 -5 bp (+25 bp from 9:30 am yesterday)
Dollar/Yuan: $6.8795 unch
Dollar/Yen: 130.90 -0.83 yen
Dollar/Euro: $1.0936 -$0.0017
Dollar Index: 101.51 -0.08
Gold: $2042.70 +$4.50
Bitcoin: 28,169 -98
Crude Oil: $80.32 -$0.39
DJIA: 33,449 +46
NASDAQ: 12,018 -108
S&P 500: 4088 -13
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.