Morning Report: Ratio of job openings to unemployed back to pre-recession levels 9/9/16

Vital Statistics:

Last Change
S&P Futures 2159.0 -12.0
Eurostoxx Index 347.1 -2.0
Oil (WTI) 46.7 -0.9
US dollar index 86.4 0.3
10 Year Govt Bond Yield 1.65%
Current Coupon Fannie Mae TBA 103.3
Current Coupon Ginnie Mae TBA 104.2
30 Year Fixed Rate Mortgage 3.52

Stocks are lower as emerging markets sell off. Bonds and MBS are down.

Risk-off feel today, but bonds aren’t rallying. What is going on? Global bond yields are increasing, especially in Japan where the BOJ is taking a breather purchasing bonds. The German Bund is down as well. Some strategists are beginning to sense that the Japanese bond market could be headed lower. So, despite weak US economic data, a global bond sell-off will affect US Treasuries as well.

Boston Fed President Eric Rosengren is sounding hawkish, which is not his natural home. His argument is that a campaign of slow, steady rate hikes will prolong the expansion more than waiting and then having to move more aggressively. Of course it all comes down to wage growth, which decelerated in the last jobs report.

Barry Ritholz took a look at the the lack of wage growth and comes up with an interesting chart: the ratio of the unemployed to the number of job openings. This ratio is back down to pre-crisis levels. While we have yet to see much evidence of increased turnover in the quits rate, it does appear at least anecdotally that we are seeing more turnover. Certainly the stage is set for further wage inflation.

jolts-to-unemployed

Mortgage credit tightened slightly in August, according to the MBA. Apparently, one investor is exiting the correspondent business and that accounted for the tightening. Credit is easing in the jumbo space however.

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