Good Morning All-
We had some major
economic news come out in the past 2 days. A lot of job information was
released and as you know jobs is the number one thing that everyone is talking
about.
Yesterday, we had the
ADP Private employment report. For those of you who do not know what ADP is,
look as some of the paystubs your clients have. Odds are in the upper right
hand corner it says "ADP." This is a corporation who handles payroll
checks for thousands of companies. So a few years back, they came up with the
ADP employment report and who better to report employment than the company that
handles most of our checks.
Remember when numbers
come out the market has an estimate, and based on were the actual number comes
in, we get movement. Now ADP only measures private employment and they also do
not account for all jobs out there. The market estimated that there were
143,000 jobs created. The actual ADP report came in at about 201,000 jobs. The
markets loved this move. That is why we saw the DOW gain almost 250 points
yesterday. Our mortgage bonds (what our rates are based off of) lost almost 50
basis points. In our world that is .375 price or maybe .125% in rate. Our rate
sheets reflected about that.
Today is known as
Jobs Friday. The first Friday of every month reports major economic jobs data.
It's like the Superbowl for finance every month. Once a month we have the
government jobs number come out which takes all jobs both public and private
into it's readings except farm jobs. In the height of the crisis this number
was negative. We were shedding about 700K a month for a few months. Over the
year and a half, this number has begun to move positive.
Today we had the Jobs
Number (also known as the Non Farm Payrolls) come out. The market estimated
130K new jobs were created and in actuality there was only 90K in new jobs
created. Now in itself that does not seem awful, but we really need around 175K
in new jobs being created to grow. Plus the previous month's number was revised
down. Last month the government released info that stated that 163K new jobs
were created and now they lowered that number by 23K. So that made the jobs
outlook even poorer.
Next we had the
Unemployment Rate come out. The market estimated 8.3% unemployed, and the
actual number came in at 8.1%. So how did the rate go down, when the jobs
number was terrible? Easy, people stopped looking for a job, thus fell out of
the survey, or many of the seasonal jobs (our college kids) left their jobs and
went back to school. They are technically not unemployed as school is
considered employment.
So with this huge
amount of info, stocks went from positive to negative and our mortgage bonds
went from -30bps this morning to +70bps. That is a 100 basis point move. Our
rates should open up about .125% to a .250% in rate today.
It is never a good
idea to gamble on a day like today but let's all use this much better pricing
going into the weekend so we can procure more business. Putting all the
hardships we endure on a daily basis aside, rates will improve on our rate
sheets today.
Educate your clients,
be aware of the market, and let's close some deals.
Josh
No comments:
Post a Comment