Non Farm Payrolls Friday coming Tomorrow 8:30 AM ET

November 3rd, 2016

Commentary:

MBS closed modestly changed in price and unchanged to tighter on spread ahead of the Jobs Report. It will be interesting to see what happens. Many times I make a big deal about nothing. We shall see what happens tomorrow. The next big thing is the election, and more potential of fireworks. Stay tuned and let me know if you have any questions or if I can help in any way.

 

MARKET WRAP:MBS saw little movement in today's session ahead of tomorrow's Jobs Report for October. It is expected that U.S. employers added 175K new workers last month. The Bond closed at 103.0, unchanged. The S&P 500 closed lower for the 8th straight session, its longest such streak since October 2008 during the financial crisis. Facebook shares weighed on Stocks along with uncertainty over next week's presidential election. The fear index, or the VIX, closed higher at 22.22. The higher the VIX moves, the more fear in the equity markets. The Dow lost 28.97 to 17,930.67, the S&P 500 fell by 9.28 points to 2,088.66, while the Nasdaq lost 47.16 points to end at 5,058.41. WTI oil closed at $44.66/barrel, -$0.68. The October Jobs Report will be released at 8:30 a.m. ET tomorrow where it is expected that employers added 175K new workers. As always, be sure to tune in to catch the numbers and the market's reaction.

 
 
 
 
 
What is the 'Nonfarm Payroll'

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.

Read more: Nonfarm Payroll Definition | Investopedia http://www.investopedia.com/terms/n/nonfarmpayroll.asp#ixzz4MJSnGcUi

 

Nonfarm Payroll comes out typically the first Friday of every month.  If the report is dramatically different than expectations, then expect volatility.  This is why many consider this the most important report of the month.  Volatility can be good for rates or bad. Below is what the market is expecting.

11/4/16 8:30 AM     
ReportFor EstimateActual PriorImpact
Non-Farm PayrollsOct175k 156KHIGH
Average Work WkOct34.4 34.4HIGH
Unemployment RtOct4.90% 5.00%HIGH
Hourly EarningsOct0.30% 0.20%HIGH

 

What Is Going On With Interest Rates?  #wigowir

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. Remember in the bond market Bad News is Good News and Good News is Bad news
 
Below is how the markets closed.
 
Currently we are above the 200 day moving average, but we have spent some time below it over the last 5 days.
 
 

3:38 PM Stocks on course for the biggest weekly loss in 8 weeks.

2:13 PM MBS trapped in a tight range as the session wears on with little movement seen.

12:49 PM Near midday, MBS flat, Stocks lower. WTI oil $44.39/barrel, -$0.97. 10-yr yield 1.80%.

12:01 PM The S&P 500 is clinging to meager gains as it tries to snap a 7-day losing streak.

10:13 AM Freddie Mac reports that the 30-yr fixed conventional mortgage rate ($417K or less) rose to 3.54% this week with 0.5 in points and fees.

10:02 AM The October ISM Service Index 54.8 vs 55.8 expected and down from 57.1 in September.

9:30 AM The S&P trades near unchanged as the trading day gets underway.

9:19 AM RealtyTrac reports that home prices hit a new all-time high in the third quarter. The median home price increased 6% to $230,000, up 10% from last year and 1% above the pre-recession peak of $227,000 in 2005.

8:34 AM  Q3 Productivity 3.1% vs 1.8% expected.

8:32 AM Weekly Initial Jobless Claims rise 7K to 265K vs 256K expected.

8:21 AM The Chicago Cubs win the World Series for the first time since 1908.

8:18 AM U.S. employers announced they would cut 30,740 jobs in October, a 31% decline from September and a 5-month low.

8:16 AM Weekly Initial Jobless Claims, Q3 Productivity at 8:30, ISM Services at 10.

8:15 AM U.S. dollar index 97.36, -0.04.

8:14 AM WTI oil $45.68/barrel, +$0.35.

8:13 AM 10-yr T Note yield 1.82%.

8:12 AM MBS open flat to lower a day after the Fed left interest rates on hold.

Contact

John Marbury
jmarbury@nationalbankofcommerce.com
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