Morning Report: The economy added 517,000 jobs in March

Vital Statistics:

S&P futures39547.4
Oil (WTI)60.34-0.12
10 year government bond yield 1.72%
30 year fixed rate mortgage 3.34%

Stocks are flattish this morning as we round out the first quarter of 2021. Bonds and MBS are up small.

The economy added 517,000 jobs in March, according to the ADP jobs report. Leisure and hospitality accounted for 169k, with professional & business services adding another 92k. Note the Street is looking for 625,000 new jobs in this Friday’s employment situation report.

Mortgage applications fell 2.2% last week as purchases decreased 2% and refis fell 3%. This is the third week in a row with a decline in mortgage applications. “After seven consecutive weeks of increasing mortgage rates, the 30-year fixed rate declined 3 basis points to 3.33 percent, which is still almost half a percentage point higher than the start of this year,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Mortgage applications for refinances and home purchases both declined, but purchase activity was still convincingly higher than the pandemic-induced drop seen a year ago, as well as up 6 percent from the same week in March 2019.”

Consumer confidence jumped in March, according to the Conference Board. “Consumer Confidence increased to its highest level since the onset of the pandemic in March 2020,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “Consumers’ assessment of current conditions and their short-term outlook improved significantly, an indication that economic growth is likely to strengthen further in the coming months. Consumers’ renewed optimism boosted their purchasing intentions for homes, autos and several big-ticket items. However, concerns of inflation in the short-term rose, most likely due to rising prices at the pump, and may temper spending intentions in the months ahead.”

Despite COVID, HUD has no intentions of raising the FHA’s mortgage insurance premium charges. The insurance fund is at $80 billion and is above the 2% minimum capital requirement. That said, we have a foreclosure moratorium, which is delaying insurance filings, so the health of the insurance fund is overstated.

Biden intends to unveil a $2.3 trillion infrastructure plan this afternoon, which will target roads and bridges and will build out an electric vehicle charging network. The plan will be paid for by raising corporate taxes.

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