Morning Report: Jobs report disappoints 9/6/16

Vital Statistics:

Last Change
S&P Futures 2180.0 2.0
Eurostoxx Index 351.0 0.3
Oil (WTI) 44.2 -0.2
US dollar index 86.5 -0.2
10 Year Govt Bond Yield 1.59%
Current Coupon Fannie Mae TBA 103.3
Current Coupon Ginnie Mae TBA 104.2
30 Year Fixed Rate Mortgage 3.5

Markets are slightly higher this morning on no major news. Bonds and MBS are flat.

Jobs report data dump:

  • Nonfarm payrolls + 151k vs 175k expected
  • Unemployment rate 4.9% vs 4.8% expected
  • Labor force participation rate 62.8% flat
  • Average hourly earnings +0.1% vs. 0.2% expected
  • Average weekly hours 34.3 versus 34.5 expected

Overall, not a report that should move the needle for the Fed, especially with respect to the September meeting. Bonds initially rallied on the report, but sold off during the rest of the day. The key numbers (the disappointing hourly earnings and average weekly hours) point to the Fed standing pat in September.

The ISM Non-Manufacturing missed expectations by a country mile, falling to 51.4 versus expectations of 55. Growth is still positive (since the number is above 50), but growth took a big step back.

The Labor Market Conditions Index slipped to -0.7 in August.

Lack of construction workers are a drag on housing, according to Freddie Mac. About 30% of the construction workers from 10 years ago found jobs in other fields. There are about 200,000 unfilled construction jobs in the US at the moment, and the ratio of job openings to hiring is the highest since 2007. The number of open jobs has increased 81% over the past two years.

Home prices rose 6% YOY in July, according to CoreLogic. Home price appreciation continues its torrid pace out West, while the Northeast and Midwest lag. We are beginning to see overvalued markets especially out west. Here is a map of the overvalued (red) and undervalued (green) markets:

corelogic MSAs

Delinquencies ticked up in July, according to the Black Knight Financial Services Mortgage Monitor. Part of that was technical, with the month ending on a Sunday. Foreclosures and foreclosure inventory continue to work their way downwards.

What are the markets thinking about the Hillary versus Trump match up? While the US has some betting markets, the UK has a very liquid market in betting. You can track the markets here, at Sporting Index. The current markets are here:

sporting index markets Hillary and Trump

The original bets pre-dated the conventions, so the payout is 25 if the person gets the party nomination and 50 if they win. Based on these markets the implied probability of the election is 72% Clinton, 28% Trump. FWIW, in the US-based PredictIt markets, Trump costs 37 cents and Hillary costs 64 cents…

18 Responses

  1. Frist!


  2. Anyone think Trump’s Mexico visit will boost his numbers with Latinos?


  3. Yep.

    “The Unrelenting Pundit-Led Effort to Delegitimize All Negative Reporting About Hillary Clinton
    Glenn Greenwald

    Sep. 6 2016, 10:53 a.m.”


    • It doesn’t really matter… Nobody trusts the media anymore and most people get their info from Facebook..


    • Nobody seriously trusts the media and nobody should. People agree with the facts or opinion they like and disagree with what they don’t (or, what they find comports with their worldview, at least, even if they don’t like it).

      Had a conversation with a liberal person I don’t know on Facebook where I took the position that HRC is a Wall Street shill and a neocon, that the only real difference in her fp will be branding and presentation . . . she disagreed. Hillary is the perfect noble liberal and has never done an illiberal or self-serving thing in her life. Any disputing of this narrative would be me trying to “have my own facts”—something used so often it has become a cliche, just another way of saying “my opinion is fact, your opinion is bullish*t”.

      Whatever the news used to be, it isn’t now, and people don’t want it to be.


  4. The Dallas Morning News(DaMN)is an absolute bastion of Republican Party support. It today claims that The Party nominee is no Republican. I think that is a fair take.

    Liked by 1 person

    • The emphasis should be on the fact that there is no evidence that Donald Trump is particularly serious about any of it. Everything is, indeed, negotiable because he’s covered almost all positions on every issue. Many of them during this campaign. I think he’d execute very little of what he’s talking about, and he impresses me as a person for whom the presidency is just a bucket list goal (I mean, more so than most of them). Of course he’s not a conservative . . . he’s not an ideologue at all.


  5. Brent, while I think my ‘Horns had the most exciting victory of the weekend, Wiscy’s D was surely impressive against LSU.


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