You are currently viewing Market Snapshot 6/5/24 – ADP Payrolls

Market Snapshot 6/5/24 – ADP Payrolls

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

ADP Payrolls came out today and were dismal.

ADP does not have a great track record for correlating with the jobs report, which is due out on Friday but now, traders are buying into the fact that employment is slowing (which is clear). The 10-yr treasury is down to 4.30% and mortgage bonds are up another 18bps. The ISM non-manufacturing survey came in a little hotter than expected and the Bank of Canada did cut its rate by .25 as expected. With all of that, rate sheets today are continuing to improve as traders grow more optimistic that recent data will bring Fed rate cuts this year.

Tomorrow should be calm as well before the big moves come on Friday with the release of the BLS jobs data.

Tomorrow also brings the European Central Bank meeting details, and that could trickle over into our markets and affect our morning rate sheets. The ECB is facing a similar issue that our Fed is/was… an uptick in inflation that could get in the way of cutting rates. The ECB action won’t cause big moves, but it could cause some early moves. Both mortgage bonds and the 10yr Treasury yield blew through technical support levels yesterday as the day went on, without a pause. It was concern that those technicals might stall improvement today, but it didn’t and it opens the door wider to floating. While I am excited about the direction we are in, I still don’t like the idea of floating into Friday’s jobs report.

I loved the below insight from a Harris Poll (great opportunity to educate):

Americans Still Want to Own a Home and Think About Homebuying Often

  • Top of Mind: In addition to four in five Americans (83%) believing that homeownership is an essential life milestone, 40% think about buying a home at least once a week, especially Gen Zers (62%) and Millennials (55%).
  • Making It Work: About six in 10 people (58%) would spend less on nonessentials to save for a down payment for a home, and more than two in five (45%) would consider taking on a gig job or side hustle.
  • Reasons to Own: U.S. adults cite privacy (49%), long-term financial benefits (44%) and a place to make memories (33%) as the most important reasons to own a home.
  • Good Vibes: More than half of Americans (51%) associate homebuying with being excited. Many also associate homebuying with feeling proud (43%), motivated (32%) and confident (30%).

Buying a Home Is Exciting, But People Are Nervous

  • Lacking Confidence: Over half of Americans (56%) feel that they are in a worse position to buy a home than prior generations.
  • The Great Unknown: one in four associate homebuying with being stressed or nervous.
  • Nerve Drivers: When it comes to what aspect of homebuying makes people nervous, 85% are at least somewhat nervous about purchasing a “money pit,” and around 3 in 4 are at least somewhat nervous about being able to afford a home, finding the right home or finding the right partner to help them buy one.
  • Long-standing Myths and Knowledge Gaps About Homebuying Persist
  • The Basics: A majority of Americans have a poor understanding of many aspects of homebuying. Only around half correctly identified the meaning of terms such as “APR” (56%) or “PMI” (54%); of this group, Gen Zers and Millennials are less likely to be familiar.
  • Financial Knowledge: Only about one in three people know key facts about financing a home, including that a minimum down payment of 20% is not required (36%) or that one can qualify for a mortgage with a credit score in the 500s (28%).
  • Myth Buster: More than half (54%) believe—incorrectly—that mortgage rates are at an all-time high, and one in six aren’t sure at all whether they are at the highest. In fact, the highest rates on record were in 1981, when the 30-year fixed rate peaked at 18.6%, much higher than today.

Stay safe and make today great!