Morning Report: Seasonal adjustments account for the big jump in payrolls.

Vital Statistics:

 LastChange
S&P futures4,5008.2
Oil (WTI)91.77-0.53
10 year government bond yield 1.92%
30 year fixed rate mortgage 3.88%

Stocks are flattish this morning as earnings continue to come in. Bonds and MBS are down small.

The week after the jobs report is usually pretty data-light, and this week is no exception. The big number will be the Consumer Price Index on Thursday.

Speaking of the jobs report, one of the explanations for the big jump in payrolls was a seasonal adjustment. Generally speaking a lot of people get hired for the holiday shopping season and then get laid off in January. BLS adjusts for that in its seasonal adjustments. This time around, the layoffs didn’t happen, as many employers decided to hang onto these temp workers since the labor market is so tight. So the 467k number more accurately represents people who ordinarily would have been let go that weren’t. I suspect that is the driver for the big difference between the ADP number (loss of 200k) and BLS (gain of 467k).

Mortgage rates continue to soar higher, reaching the highest level since late 2019. Most lenders are quoting rates in the 3.875% – 4% range. Big MBS investors like AGNC Investment noted that mortgage backed securities spreads are widening in January as investors are reluctant to catch a falling knife from the Fed.

United Wholesale is suing one of its broker partners for selling loans to Rocket and Fairway. This stems from a policy introduced last year, which made brokers agree to not sell loans to Rocket or Fairway.

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