Vital Statistics:
Last | Change | |
S&P Futures | 2352.5 | -1.3 |
Eurostoxx Index | 379.9 | -0.8 |
Oil (WTI) | 52.1 | 0.4 |
US dollar index | 90.7 | |
10 Year Govt Bond Yield | 2.31% | |
Current Coupon Fannie Mae TBA | 102.78 | |
Current Coupon Ginnie Mae TBA | 104 | |
30 Year Fixed Rate Mortgage | 4.06 |
Stocks are lower this morning after a surprisingly weak jobs report. Bonds and MBS are up.
Jobs report data dump:
- Nonfarm payrolls up 98,000. Expectations were for 175k so this is a huge miss
- Unemployment rate down to 4.5%
- Employment to population ratio increased to 60.1%
- Average hourly earnings up 0.2% MOM and 2.7% YOY
- Labor force participation rate flat at 63%
Part of the payroll miss could be explained by bad weather in the Northeast and the Midwest in March. We saw jobs increase in professional and business services while payrolls contracted in retail. The labor force increased by 145k, while the number of employed people increased by 472k and the number of unemployed fell by 326k. The number of involuntary part time employees (people who would like a full time job but can only get a part time one) fell, as did the number of long term unemployed and discouraged workers. While the payroll number will garner all the attention, the internals of the jobs report show the slack is being used up in the labor market, so it isn’t as bad as it initially appears.
The Fed Funds futures took down their probability of a June hike from 71% to 66% on the jobs report.
Two things happened yesterday which could push bond yields lower. First the US attacked air bases in Syria in retaliation for using chemical weapons. International tension is almost invariably bond bullish as investors put on the flight to safety trade. The other is the Democratic filibuster of Neil Gorsuch. This probably forecloses any sort of possibility for bipartisan legislation, particularly stimulus plans or tax cuts. In fact, the debt ceiling battle could become an epic game of chicken as the government is rapidly running out of borrowing capacity. While the second scenario is not necessarily bond bullish the first one definitely is.
Fannie Mae’s Home Purchase Sentiment index fell last month as high prices and low inventories take their toll. The number of people who think it is a good time to buy fell by 10 percentage points while the number tho think it is a good time to sell rose by 9 percentage points. People are less bullish on their economic future as well.
Neel Kashkari disputes Jamie Dimon’s assessment of the regulatory environment for banks, citing the Fed statistic that there is a 70% chance of a bailout in the next century. Jamie Dimon declared the era of too big to fail is over, while Kashkari disagrees. Forecasting banking scenarios over a 100 year time period is probably a fool’s errand. I wonder what banking regulators thought in 1917 (The Fed had only been established a few years earlier). Kashkari is a bit of a regulatory hawk and thinks the capital standards should be doubled.
San Francisco Fed President John Williams says it should take about 5 years for the Fed’s balance sheet to shrink to a normal level once they start reducing it. Of course the open question is “what constitutes normal?” Prior to the financial crisis, the Fed’s balance sheet was under $1 trillion. It is now pegged at $4.5 trillion.
Filed under: Economy, Morning Report |
Pardon me for my confusion.
https://mobile.nytimes.com/2017/04/07/world/middleeast/missile-strike-syria-russia.html?_r=0&referer=
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i’ve been trolling with that bait all day and i haven’t had a singe bite…
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Heh.
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Kashkari is a bit of a regulatory hawk and thinks the capital standards should be doubled.
As you have written, more security is built into financial markets by higher capital standards than any other regulatory manuever. In fact, other regs might be considered ineffective as security blankets for the financial world compared to higher capital, as I view it.
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Why not triple or quadruple them, just to be really secure. Hell, make banks hold 100% deposits as reserves and we’ll never have to worry about D.C. bailing them out again.
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Considering the trillions the Fed has injected into the banking system, what percentage of bankind money is made of of individual depositors money anyway?
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Sure – and go on an asset based standard money supply as well. I like natural gas. What’s your poison?
New drug ad:
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Breaking, the Times Syndicate not happy with the current media landscape, uses Appeal to Authority to justify censorship.
http://www.latimes.com/nation/la-na-us-two-worlds-20170410-story.html
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This man is a hero.
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Worth noting:
“Branded With a Scarlet ‘G’
by David French January 24, 2017 1:53 PM
The Fourth Circuit takes aim at gun owners’ civil rights.”
http://www.nationalreview.com/article/444180/gun-control-fourth-circuit-court-appeals-concealed-carry-permit-firearms-civil-rights
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Good piece on the border adjustment tax.
https://www.washingtonpost.com/news/wonk/wp/2017/03/11/when-it-comes-to-corporate-tax-reform-the-gop-may-be-on-to-something-really/
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Oh the hilarity of the left discovering the issues with government sponsored media:
“Will the Voice of America Become the Voice of Trump?
The president is poised to turn a government broadcaster into his personal megaphone.
By Chris Iovenko
April 11, 2017”
https://newrepublic.com/article/141707/will-voice-america-become-voice-trump
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Only the left gets to use the government propaganda…
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I get the concern, I always feel less gay after I eat there.
http://dailycaller.com/2017/04/11/universitys-lgbt-students-fear-arrival-of-chick-fil-a/
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