Markets are flat this morning as labor costs rise. Bonds and MBS are down.
Janet Yellen will be speaking at noon today.
Mortgage applications fell 0.2% last week as purchases rose 7.7% and refis fell 6%. Not bad considering last week had the Thanksgiving holiday.
The ADP employment change came in at 217k, beating Street expectations of 190k. The prior month was revised upward. The forecast for Friday’s payroll number is 200k. If we get a similar payroll number on Friday, a rate hike in two weeks will be looking like a sure thing.
Productivity increased 2.2% in the third quarter and unit labor costs rose to 1.8%. Productivity growth has been slow, and employers are having to add people. We saw something similar in the ISM report yesterday. Employment was the bright spot in an otherwise disappointing report.
The ISM New York Index fell to 60.7 from 65.8.
While auto sales didn’t meet their lofty targets yesterday, they were the best in 14 years. Volkswagen’s US sales dropped 25% however in the wake of the emissions scandal. It looked like sales accelerated through the month as well.
Home prices rose 1.0% month-over-month in October and are up 6.8% year-over-year, according to CoreLogic. They are forecasting prices to rise 5.2% next year.
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