October 4th, 2017
Full Rate Sheet Wednesday! https://www.johnmarbury.com/blog/10348/full-rate-sheet-wednesday
Suggestions that can change during the day: Mortgage Bond prices are near unchanged after slow job growth in August was reported by ADP. Carefully floating is recommended.
After close Commentary: Not much movement in Bond prices today as the surge in the ISM Service Index kept a lid on any upward movement. The 30-yr Fannie Mae 3.5% coupon closed at 103.16, +3bp, just above support at the 100-day Moving Average (103.11). Stocks were able to squeak out gains which led to record closing levels for the big three indexes. Secretary Tillerson's remarks of staying at his post along with the strong ISM data led Stocks higher. The Dow closed at 22,661.64 up 19.97 points, the S&P gained 3.16 points to 2,537.74, while the NASDAQ rose 2.91 points to end at 6,534.62. The S&P is on a seven-day winning streak, the longest stretch since May. WTI oil ended at $49.98/barrel -$0.44 on an unexpected jump in U.S. crude oil exports. 10-yr T Note yield 2.32%. Tomorrow's economic data is limited to Weekly Initial Jobless Claims.
Late morning Commentary: In the first of two key employment reports this week, ADP Private Payrolls rose by 135,000 versus the 160,000 expected, impacted by recent hurricanes Irma and Harvey. August was revised lower to 228,000 from 235,000. The numbers had little impact on trading as the ADP data is often seen as second tiered and off target. Breaking the numbers down; small businesses with less than 50 employees lost 7,000 jobs, 50-499 employee sized firms gained 63,000 while 500 or more sized companies gained 79,000 new workers.
The Mortgage Bankers Association reported on Wednesday that mortgage rates were essentially unchanged in the latest week and remain at historic lows. The 30-year fixed conforming rate ($424,100 or less) increased to 4.12% from 4.11%, 30-year jumbo (greater than $424,100) rose to 4.09% from 4.06%, while the FHA 30-year rate was at 3.99%. Those rates do carry at least a 0.30 point on top of the rate.
The service sector of the U.S. economy hit its best level in 12 years in September. The ISM Service Index rose to 59.8 last month, well above the 55.3 expected with 14 of the 17 non-manufacturing industries surveyed reporting growth in September. Within the report it showed that the employment component rose for the 43rd consecutive month, while new orders category surged. A reading above 50 for the index indicates expansion in the service sector, and a reading below 50 signals contraction.
|Wed, Oct 04 11:49 AM The Dow, NASDAQ and S&P all now in positive territory after the Tillerson remarks.|
|Wed, Oct 04 11:11 AM Secretary of State Rex Tillerson says he never considered leaving his current post.|
|Wed, Oct 04 11:01 AM The S&P edges into positive territory, barely.|
|Wed, Oct 04 10:13 AM After the strong ISM Service report, MBS hit session lows. S&P slightly negative.|
|Wed, Oct 04 10:03 AM The ISM Service Index of 59.8 best since July 2005.|
|Wed, Oct 04 10:01 AM The ISM Service Index 59.8 vs the 55.3 expected. MBS moving lower.|
|Wed, Oct 04 9:34 AM Stocks open mixed. S&P slightly lower, Dow slightly higher.|
|Wed, Oct 04 8:33 AM The MBAs refinance index -1.8%, purchase index +1%.|
|Wed, Oct 04 8:33 AM The MBA reports that the 30-yr conforming mortgage rate at 4.12%, FHA 30-yr 3.99%, jumbo 4.09% and have been edging higher since early September. Those rates carry at least 0.30 point added on top.|
|Wed, Oct 04 8:32 AM The MBA reports that its Market Composite Index, a measure of total mortgage loan application volume, slipped 0.4% in the latest week.|
|Wed, Oct 04 8:28 AM WTI oil $50.30/barrel, near unchanged.|
|Wed, Oct 04 8:28 AM U.S. dollar index 93.20, -0.20.|
|Wed, Oct 04 8:15 AM ADP private Payrolls rise by 135K vs the 160K expected, impacted by the recent hurricanes.|
|Wed, Oct 04 8:14 AM The 10-yr yield continues to edge lower now at 2.30%, below its 200-day Moving Average of 2.32%.|
**Rate Assumptions coming soon
Johnmarbury.com has attempted to verify the information contained on this post. However any aspect of such may change without notice. Johnmarbury.com does not provide investment advice and does not represent that any of the information or related analysis is accurate or complete at any time. Forgive my spelling and grammatical mistakes due to writing skills that are lacking and the need to communicate quickly.