CHM Blog

Before 8:30 am ET when the November employment data was reported the 10 year note yield was at 4.19% +4 bps. On the reaction to the employment data the yield increased to 4.26%, MBS price down 22 bps.

November employment rate expected unchanged at 3.9% declined to 3.7%. NFP jobs thought to be +180k increased 199K, private jobs +150K as was expected. Average hourly earnings increased from +0.3%, increased +0.4% and up from +0.2% in October, year/year earnings at 4.0% unchanged from October. The participation rate at 62.8% as expected but increased from 62.7% in October.

The employment sector not as weak as was widely believed based on other recent data like the JOLTS job openings data released Tuesday. Wages on a month/month basis stronger than what was expected. More job growth. The expectations that the fed will begin cutting rates early next year are now in question. In the fast swap trading markets prices declined from what had been expected from the Fed. The 2 year note yield immediately following the report increased 10 bps.

Over the last month the decline in rates was excessive as previously noted here and likely to find resistance; today’s data is that resistance. The increase in belief that the Fed would cut in March had stretched the conviction to what we consider an over-confident market in the near term.

At 9:30 am the DJIA opened -44, NASDAQ -59, S&P -8. 10 year at 9:30 am 4.22% +7 bps; 6.5 FNMA 30 year coupon at 9:30 am -20 bps from yesterday’s close and -20 bps from 9:30 am yesterday.

At 10 am the University of Michigan consumer sentiment index, forecast at 61.9 from 61.3, increased to 69.4.

Technically the 10 year note has not traded above its 20-day moving average since late October; at its high this morning (4.27%) it tested and held the average.

PRICES @ 10:00 AM

10 year note: 4.21% +6 bp

5 year note: 4.22% +8 bp

2 year note: 4.68% +10 bp

30 year bond: 4.31% +6 bp

30 year FNMA 7.0: @9:30 am 102.79 -19 bp (-10 bp from 9:30 am yesterday)

30 year FNMA 6.5: @9:30 am 101.76 -20 bp (-20 bp from 9:30 am yesterday)

30 year FNMA 6.0: @9:30 am 100.55 -33 bp (-32 bp from 9:30 am yesterday)

30 year GNMA 6.0: @9:30 am 100.96 -29 bp (-28 bp from 9:30 am yesterday)

Dollar/Yuan: $7.1655 +$0.0151

Dollar/Yen: 144.32 +0.19 yen

Dollar/Euro: $1.0750 -$0.0046

Dollar Index: 104.11 +0.57

Gold: $2022.60 -$24.50

Bitcoin: 43.941 +554

Crude Oil: $70.69 +$1.35

DJIA: 36,209 +92

NASDAQ: 14,351 +11

S&P 500: 4595 +9

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.