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Saturday’s: 9AM 1590 AM/97.9 FM KVTA
Sunday’s: 7AM K-EARTH 101 FM
Listen Live
Saturday’s: 9AM 1590 AM/97.9 FM KVTA
Sunday’s: 7AM K-EARTH 101 FM
MBS OVERVIEW
4:00 EST – Our benchmark FNMA MBS 6.00 April Coupon is up +6 BPS with 60 minutes left to trade.
Jobs, Jobs, Jobs: The March ADP Employment Change was much lower than expected… showing 145K vs. est. of 200K. February was revised upward from 242K to 261K.
Taking it to the House: Weekly Mortgage Applications decreased by -4.1% after several weeks of gains. Purchases dropped by -3.5% and Refinances fell by -5.4%.
Services: The March ISM Services PMI (2/3 of our economy) barely showed expansion with a reading of 51.2 vs. est. of 54.5. New Orders fell from 62.6 to 52.2, Employment Dropped from 54.0 to 51.3 and Prices Paid fell from 65.6 to 59.5
Central Bank Palooza: The Reserve Bank of New Zealand bucked the trend and actually raised rates more than expected, moving up 50BPS vs. est. of 25BPS. Their main rate is now 5.25%.
On Deck for Tomorrow: Challenger Job Cuts, Initial Weekly Jobless Claims.
Two data releases over the last two days indicate the employment sector is slowing; yesterday the JOLTS job openings declined by 6%, and today ADP private jobs, expected 200K, reported +145K, down 28% from estimates. On Friday the March employment data, another weaker job growth a trifecta that will cool off the rate increases that were echoed by Loretta Mester, Cleveland Fed that rates will increase and stay higher for longer than is expected. If it weren’t for her comments the rate markets would likely be a little better than they are today. Known as a hawk at the Fed, St. Louis Fed Pres. James Bullard at 10:00, he will have the last word this week as no other Fedster is scheduled this week. Because of the employment on Friday the bond and mortgage markets will stay open until 2:00 pm, normally closed all day for Good Friday.
The ISM services index this morning, the key index reported at 51.2 against consensus estimates of 54.4. Over 50, still in expansion.
Tomorrow weekly jobless claims, expected at 201K from 198K the prior week. Tomorrow traders prepare for Friday’s employment report, a good possibility interest rates will edge higher and MBSs lower after the recent improvements. On Friday, if job growth mirrors the weakness seen in ADP numbers today and JOLTS job openings weakness, we would look for the 10 year note to end Friday at 3.20% and MBS prices up 45 bps. We have been floating the past few days, now will lock most of it ahead of Friday’s data.
