Stocks are mixed and Mortgage Bonds are trading slightly lower so far this morning. The ADP released their Employment report for November, showing that there were 208k jobs created. This was lower than expectations of 225k, but still a decent number. This did mark the 8th month in a row of 200k+ job creations. Additionally, last month’s figure of 230k was revised higher to 233k. We will see how Friday’s more important BLS Jobs Report fares. But given that the two reports have correlated pretty well over the last few months (as seen below), with the BLS usually coming in higher, we could expect a report on Friday over 200k. More on that in our Jobs Report Strategy tomorrow.
Earlier this morning, the Mortgage Bankers Association reported that Mortgage Applications decreased by 7.3%. This was led by Refinances, which were down 13%. Refinances accounted for 60% of total applications. Purchases, on the other hand, were up by 3% and are now down only 4% on a year over year basis. This is one of the narrowest margins we have seen in a while. Interest rates decreased from 4.15% to 4.08% to the lowest level since May 2013, with 0.28 points paid.
Later this afternoon at 2:00pm ET the Fed’s Beige Book will be released.
Mortgage Bonds are trading in the middle of a range between support at the 25-day Moving Average and overhead resistance at 104.29. The 10-year Treasury Note Yield has moved higher after breaking 2.22% and is now just below the 25-day Moving Average. This level should act as overhead resistance and keep a lid on yields. Meaning – rates should hold steady and could improve.