Morning Report: Decent jobs report 3/10/17

Vital Statistics:

Last Change
S&P Futures 2378.0 11.8
Eurostoxx Index 374.8 1.9
Oil (WTI) 49.9 0.6
US dollar index 91.9  
10 Year Govt Bond Yield 2.60%
Current Coupon Fannie Mae TBA 101.438
Current Coupon Ginnie Mae TBA 102.784
30 Year Fixed Rate Mortgage 4.21

Stocks are higher this morning after a strong jobs report. Bonds and MBS are up small.

Jobs report data dump:

  • Payrolls up 235k vs 200k expected
  • unemployment rate 4.7%
  • labor force participation rate 63%
  • average hourly earnings up 0.2% MOM, up 2.8% YOY

Overall a decent report. Didn’t match the ADP number on payrolls, but ADP generally correlates with the revised BLS report, not the first one. Looks like the Fed is going to hike next week. Note another big increase in construction employment, to 58k, which is the highest since 2007. Bonds had already sold off on the strong ADP number, so they are recouping some of those losses today.

Donald Trump met with community bankers yesterday and promised to ease the regulatory burden the state has imposed on them. There has generally been bipartisan agreement that the regulatory burden on small banks has been too heavy, and that it is inhibiting credit to small business.

Goldman is out with a call this morning forecasting that the Fed will hike 3x this year: March, June, and September. They expect the Fed to end their reinvestment of maturing assets in the fourth quarter this year. The end of reinvestment shouldn’t have a major effect on mortgage rates, since spreads were largely insensitive to QE in the first place.

The Fed funds futures are now forecasting a 50% chance of a June rate hike, up from about 20% a couple weeks ago.

Household net worth increased to record levels in the fourth quarter, according to the Federal Reserve. The ratio of net worth to disposable income hit 6.5x, which matches bubble-era highs.

%d bloggers like this: