ADP Today Non-Farm Payrolls tomorrow (Potential Volatility)

January 5th, 2017

 

On December the 15th the market was so volatile that we were unable to post rates that day.  Below is what was our commentary on 12/15/16.http://www.johnmarbury.com/blog/7981/consumer-price-index-cpi

12/15/16 the 10 Year Treasury  was 2.599%.  Today the ten year treasury is 2.348%. This is a drop of 0.25% on the yield   (See chart below) You will also see that the low was 1.3579% back in July 2016 which makes this recent drop a little less impressive. Regardless tomorrow is Employment Report Day, and potentially the most volatile day of the month.  Stay tuned in tomorrow, and see how the story unfolds.

Want to see what happen last month when employment numbers were reported click:http://www.johnmarbury.com/blog/7853/non-farm-payrolls-  The short answer is "Nothing." Every now and then the market can get surprised.

 
Below is what the market is expecting, and the market does not like surprises.
 
Date & Time of ReportReportForEstimateActualPriorImpact
01/06/17Non-Farm PayrollsDec175K 161KHIGH
 Average Work WeekDec34.4 34.4HIGH
 Unemployment RateDec4.70% 4.60%HIGH
 Hourly EarningsDec0.30% -0.1%%HIGH
 
 

Bond prices rise as uncertainty surrounding Trump policies grows:

http://www.cnbc.com/2017/01/05/bond-prices-rise-as-fed-gears-up-to-raise-rates-to-counter-trump-inflation.html (When the price goes up, yields come down)

 

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.

4:00 PM Stocks end lower as bank shares fall, department stores shares decline on the Macy's news.

1:38 PM Prices have enjoyed a big rally that has taken place since December 15. Uncertainty of the upcoming Jobs Report tomorrow at 8:30 am et could see rates move higher if job growth is more than expected.

1:37 PM Our positions remains the same as the benchmark MBS is off 25bp from the highs and resistance.

1:09 PM MBS now edging lower from the intraday highs.

12:59 PM At midday, MBS holding solid gains, Stocks trade lower. 10-yr yield 2.36%.

12:32 PM MBS rally intraday but the 3.5% Fannie Mae 30-yr coupon hit 102.91, the high from December 7 and has ticked a bit lower from that level.

11:51 AM MBS hit session highs as the New York Fed is purchasing up to $2.45 billion in Fannie/Freddie 30-yr 3% and 3.5% coupons in the market. In addition, lower Stock prices and weaker-than-expected ADP data is supporting higher Bond prices, lower yields. 10-yr T Note yield 2.35% from yesterday's close of 2.45%.

11:30 AM Rob Chrisman reports that the MBA projects that purchase originations will total $1.1 trillion in 2017, an 11% increase from 2016. In contrast, refinance originations are anticipated to decrease by 40%. In addition, 30-yr mortgage rates will stay below 5% through the end of 2018.

11:10 AM Treasury bills, or T-bills, are sold in terms ranging from a few days to 52 weeks. Bills are typically sold at a discount from the par amount (also called face value). For instance, you might pay $990 for a $1,000 bill. When the bill matures, you would be paid $1,000.

11:10 AM Treasury notes, sometimes called T-Notes, earn a fixed rate of interest every six months until maturity. Notes are issued in terms of 2, 3, 5, 7, and 10 years.

11:10 AM Treasury bonds pay a fixed rate of interest every six months until they mature. They are issued in a term of 30 years.

11:09 AM The Dow declines by 70 points, further supporting higher Bond prices. Mortgage Bonds now at session highs with lofty gains.

11:04 AM The Treasury will sell $24B 3-yr Notes on Tuesday, $20B 10-yr Notes on Wednesday and $12B 30-yr Bonds on Thursday.

10:55 AM The 10-yr T Note yield falls to 2.38%.

10:31 AM MBS continue to push higher as Stocks grind near unchanged and ahead of big buying from the New York Fed later this morning.

10:04 AM December ISM Services Index comes in at 57.2 vs the 56.6 expected, matching the November number.

10:02 AM Freddie Mac reports that the 30-year fixed conventional mortgage rate ($424K or less) fell to 4.20% from 4.32% with 0.5 in points and fees.

10:00 AM S&P trades to near unchanged after opening lower.

9:33 AM Stocks open modestly lower, Dow -31 points.

8:42 AM MBS now edging higher after the lower-than-expected ADP data. Stocks futures slightly lower.

8:33 AM Macy's announces it will continue with its plans to close 100 stores across the country and will shed 10,000 workers.

8:31 AM Weekly Initial Jobless Claims decline by 28K to 235K vs the 265K expected, but the numbers could be distorted by the holidays.

8:28 AM The Dow begins the day just below the 20K level at 19,942 though futures indicate a slightly lower open.

8:23 AM The New York Fed will purchase up to $2.45B today in Fannie/Freddie 30-yr 3s and 3.5s beginning at 11:15 a.m. ET.

8:22 AM Not much reaction in MBS to the lower ADP numbers.

8:20 AM U.S. dollar index 102.33, -0.37.

8:20 AM Weekly Initial Jobless Claims (8:30) and ISM Services (10).

8:19 AM S&P futures modestly lower after the ADP data, but were lower before the numbers were reported.

8:16 AM ADP reports that job growth in the private sector grew by 153K vs the 170K expected and down from the 215K in November.

8:11 AM 10-yr T Note yield 2.43%, just below yesterday's close of 2.45%.

8:09 AM MBS open near unchanged ahead of December ADP Private Payrolls at 8:15.

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. On October 5th we started posting our rates and leaving them on the site for you to refer back to. This will allow  you see where actual rates have been along with the news that caused the fluctuations on the rate sheet.  I ask that you forgive my spelling and grammatical mistakes. This is due writing skills that are lacking and the need to communicate quickly.  Most of the information posted on this blog along with the charts and indexes are available all during the day to the subscrbers of www.themortgagemarketguide.com  The cost of subscription is very reasonable.

 

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