December 2nd, 2020 10:56 AM by Richard Sardella MLO.100007700/NMLS 233568
Stock indexes started slightly lower this morning, the 10 yr. note yield unchanged.
At 7:00 am ET, weekly MBA mortgage applications; the composite -0.6%, purchase apps +9.0%, refinance apps -5.0%.
At 8:15 am Et, Nov ADP private jobs were expected +420K, as released 307K, October jobs initially reported at 365K were revised to 404K. Take this month, and the revision to October, and the ADP jobs reports 74K less than estimates. ADP's jobs vary substantially from the BLS data report on Friday. The present estimate for BLS private job growth +486K from October's 638K jobs. The BLS data on Friday is likely to be quite different than current estimates; it is challenging to count jobs in this situation with the virus counting unreliable. Whatever the BLS data shows, with the vaccine on the way, markets will focus on the implications of its impact on jobs. Some still believe that unemployment will return to the 3.0% level before the pandemic, which in our view, is not likely. Unemployment will not experience those low levels any time soon as businesses learn that the digital world has changed the need for many jobs, and small businesses won't quickly add many jobs after being devastated for months.
According to ADP, service-provider employment increased 276,000 in November, reflecting gains in leisure and hospitality, health care, and business services. Payrolls at goods producers rose 31,000 last month, including a 22,000 gain at construction firms. Payrolls at small, medium, and large businesses all increased, with the biggest advance occurring at medium-size firms. Hiring rose 139,000 at those companies with 50 to 499 employees. Large businesses added 58,000 to payrolls, and small companies took on 110,000 workers.
The Pfizer vaccine has been approved by the UK, not yet in the US and the European Union. The shot will be available in Britain next week. "This is going to be one of the biggest civilian projects in history," Health Secretary Matt Hancock said in a radio interview, with 50 hospitals preparing to administer the vaccine and 800,000 doses ready. Doctors across the country were put on standby for a possible rollout. "We can see the way out, and we can see that by the spring we are going to be through this," Hancock said on Sky News. Good news, but supply is still a key issue. The UK has ordered 350 mil doses that are not yet available. The US is awaiting a decision from the US Food and Drug Administration in the middle of December, the same time horizon in which it expects a ruling from European Union regulators. The initial use will be for front health workers and those older in extended care facilities based on the current thinking; we normal folks won't be in line for a few months, maybe by March?
A new stimulus package is very much needed now, but there's still no deal, and Congress is about to fold tents until next year. A bipartisan group of senators has proposed a $908B coronavirus relief package, which includes a $180B boost for unemployment benefits and about $240B for state and local governments. Neither party's leaders have agreed to the proposal yet. Pelosi and Senate Majority Leader Mitch McConnell each took a shot at it, but no one is budging. Pelosi and Chuck Schumer presented a proposal to McConnell and Treasury Sec. Mnuchin wouldn't say what it is, calling it "a private proposal to help move the ball forward." Republican's plan, according to what we hear, is the same as before. The issue has always been money for states and cities that Dems want, while Republicans tilt to funding more unemployment assistance for those suffering. Yesterday Jerome Powell reiterated to lawmakers at a hearing that "the risk of overdoing it is less than the risk of underdoing it" on fiscal stimulus. He pointed out that the pace of improvement in the economy has weakened in recent months.
At 9:30 am ET, the DJIA opened -180, NASDAQ -75, S&P -13. 10 yr. unchanged at 0.94%. FNMA 2.0 30 yr. coupon at 9:30 +3 bps from yesterday's close and -13 bps from 9:30 yesterday.
After the volatile day in the rate markets yesterday, pushing the 10 yr. up10 bps and MBS prices down 35 bps, today ahead of Friday's employment data, it looks like it will be quiet. Investors and money managers are distilling the movements yesterday.
PRICES @ 10:00 AM ET
10 yr. note: 0.95% +2 bp
5 yr. note: 0.43% +1 bp
2 Yr. note: 0.17% unch
30 yr. bond: 1.70% +3 bp
Libor Rates: 1 mo. 0.147%; 3 mo. 0.232%; 6 mo. 0.258%; 1 yr. 0.333% (12/01/20)
30 yr. FNMA 2.0: @9:30 103.64 +3 bp (-14 bp from 9:30 yesterday)
30 yr. FNMA 2.5: @9:30 104.77 +2 bp (+5 bp from 9:30 yesterday)
30 yr. GNMA 2.5: @9:30 104.91 -14 p (-3 p from 9:30 yesterday)
Dollar/Yuan: $6.5658 -$0.0065
Dollar/Yen: 104.52 +0.19 yen
Dollar/Euro: $1.2082 +$0.0010
Dollar Index: 91.26 -0.05
Gold: $1819.50 +$0.80
Crude Oil: $44.85 +$0.30
DJIA: 29,7546 -77
NASDAQ: 12,270 -85
S&P 500: 3655 -7
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.