Morning Report: The economy added 455,000 jobs in March

Vital Statistics:

 LastChange
S&P futures4,608-18.2
Oil (WTI)108.423.79
10 year government bond yield 2.41%
30 year fixed rate mortgage 4.87%

Stocks are lower this morning on no real news. Bonds and MBS are flat.

Mortgage applications fell 6.8% last week as rates hit their highest levels in three years. Refis fell 15%, while purchases rose 1%. “Mortgage rates jumped to their highest level in more than three years last week, as investors continue to price in the impact of a more restrictive monetary policy from the Federal Reserve,” said MBA Chief Economist Mike Fratantoni. “Not surprisingly, refinance application volume declined further, as fewer borrowers have an incentive to apply at rates that are significantly higher than a year ago. Refinance application volume is now 60 percent below last year’s levels, in line with MBA’s forecast for 2022.”

The economy added 455,000 jobs in March, according to the ADP Employment Report. Leisure and hospitality added 161,000. The Street is looking for 155,000 jobs in Friday’s employment situation report, so this bodes well. “Job growth was broad-based across sectors in March, contributing to the nearly 1.5 million jobs added for the first quarter in 2022,” said Nela Richardson, chief economist, ADP. “Businesses are hiring, specifically among the service providers which had the most ground to make up due to early pandemic losses. However, a tight labor supply remains an obstacle for continued growth in consumer-facing industries.”

The final estimate for fourth quarter GDP was revised downward from 7.1% to 6.9%. The PCE price index rose 6.9%. This is the Fed’s preferred measure of inflation and it shows that inflation has been with us for a while already. Ex-food and energy prices rose 4.5%. In terms of contribution to growth, information contributed 1.06%. Real Estate contributed 0.89%. Construction was actually a drag on growth.

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