ADP Stronger than expected

June 1st, 2017

Suggestion: A strong jobs number from ADP sent Mortgage Bond prices lower this morning. Ahead of tomorrow's Jobs Report, locking is recommended.

Overview:  Hiring in the private sector surged in May signaling that second quarter economic growth could be above the anemic growth seen in the first quarter. ADP reported that private payrolls surged by 253,000 in May, well above the 185,000 expected. The big gains were seen in the small business and construction sector, key metrics for the U.S. labor force. Today's report comes ahead of tomorrow's Non-farm Payrolls report where it is expected that employers added 185,000 workers, which includes the private and public sectors.

Construction spending in April posted its largest decline in a year, falling in both private and public projects, though the numbers in March were revised higher. The Commerce department reported that construction spending fell 1.4% in April from the 1.1% gain recorded in March, which was revised from -0.2%. Within the report it showed that private construction dropped 0.7%, the largest decline in a year, while residential construction also fell 0.7% after six straight monthly increases.

Mortgage rates continued to edge lower in the latest week, though the decline was minimal at best. Freddie Mac reports that the 30-year fixed conforming mortgage rate fell to 3.94% this week from 3.95% last week with 0.5 in points and fees added on top of the rate. It was the lowest rate since the week of November 17, 2016. At the end of last year, many predicted that mortgage rates would average 4.50% in 2017, but they have been in the range of 4.12% so far this year. Last year this time the rate was 3.66%. 

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.

Thu, Jun 01 12:01 PM Not much movement in the MBS markets heading into the afternoon session.
Thu, Jun 01 10:18 AM Construction spending declines in April to -1.4% from +1.1% in March.
Thu, Jun 01 10:16 AM MBS recover somewhat from the earlier lows.
Thu, Jun 01 10:12 AM Freddie Mac reports that the 30-yr fixed conforming mortgage rate at 3.94% this week, near unchanged from last week's 3.95% with 0.5 points on top of the rate. A year ago the rate was 3.66%.
Thu, Jun 01 10:10 AM The May ISM Manufacturing Index 54.9 vs 54.7 expected.
Thu, Jun 01 10:06 AM President Trump declares June National Homeownership month. Expresses commitment to increase homeownership rate.

Thu, Jun 01 9:32 AM Stocks showing modest gains at the open.

 

9:28 AM ET  3.5% Fannie Mae 30-yr coupon down 16 bp at a price of 103.06  down 16 bp when rates were set yesterday at 10:00 am Open 103.16  High 103.16 Low 102.91

 

Numbers to watch for:

Currently Buying Opportunities for Traders

102.66 50 day moving average

102.78 25 day moving average

103.00  Traders keep their eye on round numbers and this is one them with lots of zeros    

Currently Selling opportunities for Traders

103.12  Traders keep their eye numbers that have been resistance or support in the past.  This is one of them.

103.25 200 day moving average

 
Thu, Jun 01 9:09 AM MBS edging lower.
Thu, Jun 01 8:35 AM Q1 Productivity will be released on June 5, not this morning.
Thu, Jun 01 8:28 AM Stock futures edge into positive territory after the ADP report.
Thu, Jun 01 8:22 AM Weekly Initial Jobless Claims and Productivity at 8:30, ISM Index at 10.
Thu, Jun 01 8:17 AM Bond prices declining after the strong jobs data.
Thu, Jun 01 8:15 AM May ADP Private Payrolls 253K vs 180K expected up from 174K in April.
Thu, Jun 01 8:04 AM WTI oil +$0.30 to $48.58/barrel.
Thu, Jun 01 8:04 AM U.S. dollar index 97.09, +0.24.
Thu, Jun 01 8:03 AM Ahead of ADP, 10-yr T Note yield 2.22%.
Thu, Jun 01 8:01 AM MBS look to open lower ahead of the 8:15 a.m. ET release of May ADP Private Payrolls.
Thu, Jun 01 8:01 AM Fed Governor Powell says reduce balance sheet later this year. Expects inflation to gradually increase. Appropriate to gradually raise rates.

 

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 subscribers of www.themortgagemarketguide.com  The cost of subscription is very reasonable.

 

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