CHM Blog

Partial shut down is underway, stock indexes early this morning under pressure.

At 8:15 am ADP reported its September private jobs count, expected to be +50K jobs were down -32K for the month and August private jobs originally reported +54K were revised to -3K. The decline in jobs is a huge miss from estimates, the last time ADP reported declining jobs since the Covid shock in Q2 2020, adding to the view of a significant slowdown in the US labor market. Service providers decreased 28,000 and goods producers shed 3,000. Businesses with fewer than 50 employees lost 40,000, while companies with 500 or more employees added 33,000. Since the BLS won’t report its September employment on Friday this is the only jobs measurement we will have.

The initial reaction to the ADP report pushed the 10 year note down to 4.10%, -5 bps from yesterday. Employment is slowing based on several reports. "This month's release further validates what we've been seeing in the labor market, that U.S. employers have been cautious with hiring," said Dr. Nela Richardson, chief economist, ADP.

Weekly MBA mortgage applications this morning fell from the prior week. Applications fell by 12.7% from the previous week on the period ending September 26th. Purchase applications were -1.0%, refinance applications fell 21%.

At 9:30 am the DJIA opened -89, NASDAQ -135, S&P -29. 10 year at 9:30 am 4.10% -5 bps. FNMA 5.5 30 year coupon +12 bps from yesterday’s close and +6 bps from 9:30 am yesterday.

At 9:45 am September PMI manufacturing index forecast at 52.0 reported at 52.0 from 53.0 in August.

At 10 am September ISM manufacturing index expected at 49.0 reported at 49.1.

The decline in jobs reported by ADP strengthens the idea that the Fed will lower rates at the October FOMC meeting. It is not likely the government shut down will last that long, when the politicians get a package worked out the first big data point to be reported will be the BLS September employment report. The Fed’s focus recently is on the weakening employment sector rather than inflation. Today’s ADP release keeps the focus on weaker employment and adds assurance for a rate cut later this month.

PRICES @ 10:00 AM

10 year note: 4.70% +1 bp

5 year note: 4.46% -1 bp

2 year note: 4.28% -2 bp

30 year bond: 4.94% +2 bp

30 year FNMA 6.0: @9:30 am 100.17 -8 bp (-10 bp from 10 am yesterday)

30 year FNMA 6.5: @9:30 am 102.09 -6 bp ( -8 bp from 10 am yesterday)

30 year GNMA 6.0: @9:30 am 100.56 -4 bp (-1 bp from 10 am yesterday)

Dollar/Yen: 158.31 +0.25 yen

Dollar/Euro: $1.0294 -$0.0047

Dollar Index: 109.22 +0.68

Gold: $2,681.40 +$16.00

Bitcoin: 95,003 -1458

Crude Oil: $74.23 -$0.02

DJIA: 42,239 -199

NASDAQ: 19,477 -12

S&P 500: 5899 -10

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.