August 4th, 2021 8:46 AM by Richard Sardella MLO.100007700/NMLS 233568
ADP reported private jobs about half of what the forecasts were; jobs increased 330K against estimates of 700K, the smallest monthly gain since last Feb. June ADP jobs revised a little lower, from 692K to 680K. Service-provider employment increased 318,000 in July. Payrolls at leisure and hospitality businesses rose 139,000 during the month, also the smallest advance since February. Payrolls at goods producers rose by 12,000. Employment at construction firms increased by just 1,000 in July. The weak jobs from ADP may now temper the estimates for Friday’s official employment, not unusual to see wide differences. The initial reaction sent the 10 yr. down to 1.14% -4 bps from yesterday and MBS prices up 8 bps from yesterday.
Earlier this morning MBA reported last week’s mortgage applications. Not what we would have expected with interest rates declining; the composite -17% from +5.7% the week before; purchase apps -2.0% the same decline as the week before, re-finance apps -2.0% down from +9.0%.
SEC Chairman Gary Gensler worried about control over cryptocurrency, wants more authority to regulate. “We just don’t have enough investor protection in crypto. Frankly, at this time, it’s more like the Wild West,” Mr. Gensler said in prepared remarks to the Aspen Security Forum. “We have taken and will continue to take our authorities as far as they go.” … “If this innovation has any chance of surviving into the, you know, late 2020s and 2030s, it can’t stay astride of the public policy,” said Mr. Gensler, a veteran Democratic regulator who taught a course on cryptocurrency at the Massachusetts Institute of Technology.
At 9:30 am ET the DJIA opened lower, -164 after increasing 278 yesterday; NASDAQ opened -8 and S&P -14. 10 yr. at 9:30 am 1.14% -4 bps. FNMA 2.0 30 yr. coupon +13 bps from yesterday’s close and unchanged from 9:30 am yesterday; the 2.5 coupon at 9:30 am +8 bps and +2 bps from 9:30 am yesterday.
At 9:45 am the PMI final July services index for the month, estimates were the index at 59.9 as expected and down from 63.7 in June.
At 10 am the July ISM non-manufacturing index (services), expected at 60.4 from 60.1 in June jumped to an all-time high at 64.1.
The Delta variant has increased the percentage of when herd immunity would arrest spread, prior to Delta it was 60%, now the Infectious Diseases Society of America is increasing that to 80%. Herd immunity is based on the idea that when a certain percentage of the population has been vaccinated against the virus or gains immunity by a previous infection, it helps protect the broader population and reduce transmission. The death rate attributed to the variant is about 0.0007% of those contracting it.
We don’t expect the 10 yr. yield to decline more today, or MBS prices improving from morning levels. The ADP report this morning sent rates and stock indexes lower, that is now in the present levels. ADP and BLS data have a long history of deviating from each other, while analysts will mark down the estimates that existed prior to this morning’s ADP that were thought to be +900K, how much lower will NFP job growth will be from prior estimates is what traders will struggle with today and tomorrow.
PRICES @ 10:00 AM ET
10 yr. note: 1.17% unch
5 yr. note: 0.65% unch
2 Yr. note: 0.18% unch
30 yr. bond: 1.84% unch
Libor Rates: 1 mo. 0.090%; 3 mo. 0.121%; 6 mo. 0.155%; 1 yr. 0.232% (8/3/21)
30 yr. FNMA 2.0: @9:30 102.23 +13 bp (unch from 9:30 am ET yesterday)
30 yr. FNMA 2.5: @9:30 104.34 +8 bp (-2 bp from 9:30 am ET yesterday)
30 yr. GNMA 2.5: @9:30 103.69 -17 bp (-20 bp from 9:30 am ET yesterday)
Dollar/Yuan: $6.4565 -$0.0139
Dollar/Yen: 108.83 -0.20 yen
Dollar/Euro: $1.1893 +$0.0029
Dollar Index: 91.86 -0.22
Gold: $1834.20 +$20.00
Bitcoin: 38,996 +884
Crude Oil: $68.48 -$2.08
DJIA: 34,991 -125
NASDAQ: 14,766 +5
S&P 500: 4415 -8
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.