Market Snapshot October 6, 2017

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Good Friday A.M.,

 

Today is data day with most important data set of the month, the BLS Jobs report.

 

  • Nonfarm Payrolls for Sep: Actual -33K, Consensus 100K, Last 156K.
  • Unemployment Rate for Sep: Actual 4.2%, Consensus 4.4%, Last 4.4%.
  • Avg Earnings for Sep: Actual 0.5%, Consensus 0.3%, Last 0.1%.

 

Bonds opened ugly this morning with a large gap down in price (rates higher) over that last bullet point. This was the first time in 7 years that we had negative job growth but that is temporary, completely related to the Hurricanes and will likely be revised higher in future report. Earnings on the other hand, is the Fed’s metric and is hot, Africa hot, Tarzan didn’t have it that hot. Really, it is a big deal. Higher wages drives growth and inflation and gives the Fed more reason to raise rates (needless to say, the chance of a December rate hike increased today…). At the open, the gap looked like the 10-yr was at 2.40% (that is no bueno) and Mortgage bonds -30… since then we have clawed back to a 10-yr at 2.36% (still has a negative bias) and mortgage bonds are -4bps. If you are still floating and don’t like where today’s pricing is, I think it is a good time to get a cocktail and develop some more patience as you should see a few price improvements roll in soon.

 

And as Consumers voices continue to be heard (this is not a good thing, but a great thing), Wells Fargo said it will reach out to customers who paid so-called “rate-lock extension” fees from Sept. 16, 2013, through Feb. 28, 2017, and give refunds to customers who don’t think they should have paid.

 

That is it for this week, one of the roughest in some time. Enjoy the weekend, please be safe, and make today great!