October 6th, 2016
What Is Going On With Interest Rates? #wigowir
Nonfarm payroll is a monthly report generated and reported by the U.S. Bureau of Labor Statistics intended to represent the total number of paid U.S. workers of any business. Despite the name nonfarm payroll, the report excludes workers from general government jobs, private household jobs, employees of nonprofit organizations and farm employees.
September Employment Report coming out 10/07/16 8:30 am
Estimate Prior month
Average Work Week 34.4 34.3
Non-Farm Payrolls 171K 151K
Unemployment Rate 4.9% 4.9%
Hourly Earnings 0.2% 0.1%
Below is the news when it happened and the market’s reaction. For a full view of the day start at the bottom and work your way up. If want to know what just happened start at the top. All Times are Eastern Standard Time. When the price of Mortgage Backed Securities (MBS) goes down rates go up, and when the price goes up rates come down.
MBS traded in a tight range for most of the session as traders sat on the sidelines ahead of the Jobs Report. The 30-yr 3% Fannie Mae 30-yr coupon closed at 103.47, -12bp and above support at the 100-day MA.
Stocks started the day lower, but managed to close near unchanged levels. The Dow closed at 18,268.50, the S&P 500 finished at 2,160.77, while the Nasdaq settled at 5,306.85. WTI oil closed at $50.44/barrel, +$0.61. 10-yr T Note yield 1.74%.
3:59 PM - FBR & Co. says that mortgage originations in the third quarter will top $600 billion. Total 2016 origination volume to top $2 trillion.
3:18 PM - ECB's Constancio says that ECB near taper consensus is not correct.
1:40 PM - President Obama declares a state of emergency in Florida for Hurricane Matthew.
1:21 PM - At midday, MBS slightly lower, S&P reverses and now sports a small gain. 10-yr T Note yield 1.73%. WTI oil cracks $50, now at $50.39/barrel, +$0.56, highest level since late June.
12:15 PM - What is buying on margin? A risky technique involving the purchase of securities with borrowed money, using the shares themselves as collateral. Usually done using a margin account at a brokerage, and subject to fairly strict SEC regulations.
12:02 PM - Once again today, MBS able to bounce off earlier lows. S&P cuts losses and trades to unchanged levels.
10:44 am The 100 day moving average is the orange line on the chart below. If we hit this number and bounce back higher we could see rates improve. If not this may signal higher rates in the future.
10:00 AM - Freddie Mac reports that the 30-yr fixed conventional rate ($417K or less) remained at 3.42% with 0.5 in points and fees and just above record lows.
9:59 AM - The 3% Fannie Mae 30-yr coupon falls to session lows just above support.
9:31 AM - Stocks open modestly lower as investors eye the looming Jobs Report for September.
8:41 AM - There is little chance, if any, of a rate hike in November with a 55% chance of a hike in December, according to Fed Fund Futures.
8:31 AM - Weekly Initial Jobless Claims -5K to 249K vs the 258K expected.
8:29 AM - The New York Fed will be purchasing up to $2.775B in Fannie/Freddie 30-yr 3s and 3.5s later this morning.
8:23 AM - WTI oil $49.90/barrel, near unchanged.
8:21 AM - 10-yr T Note yield 1.71%.
8:16 AM - S&P futures are lower after yesterday's rally, which was spurred on by the impressive numbers from both ISM Manufacturing and Services. Investors now see that the improving data increases the chance of a rate hike by the end of the year.
8:14 AM - It is expected that employers added 176K new jobs in September.
8:11 AM - MBS open near unchanged as traders may sit on the sidelines today ahead of tomorrow's Non-farm Payrolls report due out at 8:30 a.m ET.