November 1st, 2017
Suggestions that can change during the day: Mortgage Bonds are near unchanged despite higher Stock prices. Heading into today's Fed statement, carefully floating is recommended.
After close Commentary: MBS traded near unchanged for most of the session after a brief move lower early in the session finishing off their worst levels. Despite the S&P and the Dow closing higher and solid economic data today, MBS were able to close near unchanged. The Fannie Mae 30-yr 3.5% coupon closed at 102.74, unchanged and just above resistance at the 200-day Moving Average. The S&P 500 closed higher by 4.10 points to 2,579.36, the Dow gained 57.77 points to 23,435.01, while the tech heavy NASDAQ lost 11.13 points to end the session at 6,716.53. WTI oil closed near unchanged at $54.30/barrel. 10-yr yield 2.37%. Tomorrow's data includes Q3 Productivity and Weekly Initial Jobless Claims. The tax reform bill could come tomorrow along with the announcement of the new Fed Chair. Current Fed Governor Jerome Powell is expected to be the next Fed Chair, reports the Wall Street Journal.
Late morning Commentary: In labor market news, ADP reports that 235,000 private jobs were created in October versus the 215,000 expected. A rebound was expected after 110,000 was reported in September, which was revised lower from 135,000. September numbers were distorted by hurricanes Harvey and Irma. This is a pretty good headline read and bodes well for Friday's Jobs Report where 300,000 jobs are expected to be created.
The Federal Reserve will release its monetary policy statement at 2:00 p.m. ET this afternoon at the conclusion of the Federal Open Market Committee (FOMC) meeting. There is a near zero percent chance of a hike to the short-term Fed Funds Rate, but the headlines will be closely watched for any changes to the Great Unwind and how the U.S. economy is progressing. The FOMC holds eight regularly scheduled meetings during the year and other meetings as needed.
U.S. construction spending unexpectedly rose in September when most estimates were calling for a negative reading. Construction spending rose 0.3% in September, above the -0.2% that was anticipated to an annual rate of $1.219.5 billion. Within the report it showed that private construction and public construction increased 0.4% and 2.6%, respectively.
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