Good Morning on this best day of the week Wednesday from your Hometown Lender,

Limited news today but what there is, is impactful.

The first piece to hit the news feeds is the little spoken about annual revisions from April of the previous year through march of the current year. If you recall, employment over the last year was thought to have been very strong, surprisingly so. The average of job gains over that time period was roughly 240k/month. Today’s report is an opportunity to correct any errors over the past year… well, it did correct the errors… 818,000 fewer jobs were created over the time period (almost 70k/month less than reported).

This is a big deal… But why does this matter as it’s a year ago?

That is a great question and the answer is, the Fed has made it clear that employment is their focus, and they will cut rates to keep employment high and unemployment low. As a result of this report, the 10-yr note is back to 3.79% and mortgage bonds are having a good day as well.

In about an hour, traders will also have to contend with the release of minutes of the Fed’s July meeting. That saw officials hold rates but signal moves could be coming soon. As well as seeking clues on the outlook for rates, traders will also look for signs of what will happen once the Fed completes its current course of quantitative tightening.

If the Fed minutes are dovish, we could see a bigger rally in bonds.

Speculation in the bond market has seen traders take on a record amount of risk as they bet big on a Treasury market rally. The number of leveraged positions in Treasury futures has risen to an all-time high. The jump coincides with a ramp-up in bullish wagers over the past couple of weeks that call for aggressive rate cuts over this year and 2025. This is great if rates do drop quickly however, if they do not (if the Fed does not cut aggressively), this will also cause a spike higher as those trades unwind.

Stay safe and make today great!