Do jobs Numbers mean anything anymore?

Morgage bond prices remain positive this morning helping move rates in the right direction....lower. Rates were helped by worse than expected economic data first thing this morning.

Weekly jobless claims @382k, expected @ 375k. The bad jobs numbers has us starting the day on the right note.

Phildelphia Fed down 1.9, expected down 4.0, LEI down 0.5%, expected down 0.1%. Mixed data but seem to hold the gains so far.

The Wall Street Journal had an opinion piece this morning addressing the euro zone debt crisis. The key to the article was the following, "Could this be the beginning of the end of the euro zone's crisis? Unfortunately, the answer is "probably not." The crisis has been allowed to fester so long that the economic problem may now be too big to be addressed within the shrinking political space available."

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Downward pressure to mortgage rates.

Mortgage bond prices opened higher applying downward pressure to mortgage rates.

The New York Fed's Empire Manufacturing report showed surprise weakness in that region. With that lack of any first tier data releases this morning that report has things rate friendly so far at the open. The reading came in down 10.4, the figure was the weakest in about 2 years.

News out of the euro zone indicated the trade surplus got bigger with fewer imports and higher wages.

There is no data til Wednesday with the housing releases. Stocks and news out of the euro zone will likely dictate trade.

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Don't Fight the Fed

Don't fight the Fed"
 
That's the message from the market in the wake of Thursday's blockbuster announcement of open-ended QE from the central bank.

After surging Thursday, major averages were rallying further Friday. In recent trading, the Dow (DJI) was up 0.5%, pushing further into multi-year-high territory.

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Mortgage bond prices are slightly lower mid-morning Tuesday applying upward pressure to mortgage rates. Trade is quiet.

In news released this morning, the US trade deficit stood at $42B. Analysts expected the deficit to increase $1.9B to $44B.

With no more news set for release today, traders will spend the day watching stocks as they wait for the results of the Treasury auction of $32B of 3-year notes. At the 10:00 am ET price point the Dow was up 52 points. Auction results will be published by 1:15 pm ET.

Overnight trade in Asia and Europe was quiet. Global market participants are mostly sidelined as they wait for two key events to unfold this week. In Germany, a high court ruling on the constitutionality of the European Stability Mechanism is set for Wednesday. Thursday the Federal Reserve will announce any changed to monetary policy when the governing body concludes their two day meeting. It is believed the German court will rule the bailout fund constitutional, however they may place limits or other requirements on the fund. In the US, traders are expecting Ben Bernanke to announce QE3.

The events on Wednesday and Thursday will make history and most likely cause market volatility. It is unlikely the German court is going to give the green light to the ECB without any stipulations. The ruling may lead to more uncertainty for the euro-zone. In the US, traders are hopeful Mr. Bernanke will offer an open ended QE3 and include more mortgage debt in future purchases.

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a little bounce back from yesterday

Mortgage bond prices opened significantly positive following the disappointing payrolls figure.

Unemployment @ 8.1%, expected @ 8.3%, Payrolls +96k, expected +125k.

We got hit hard yesterday with rate increases but fortunately have erased the afternoon losses and then some.

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Rates Getting Crushed

Mortgage bond prices opened considerably lower pushing rates higher this morning. The strong data was the catalyst.

ADP employment up 201k, expected up 140k, Weekly jobless claims @ 365k, expected @ 370k. The better than expected data combined to cause MBS prices to tank and rates to push higher in the short term this morning.

We are still waiting to hear results of the European Central Bank meeting but analysts expect some additional information on a bond buying program designed to keep rates low for member nations. We can expect some reversal of the flight to quality buying of US debt instruments as a result in the short term, but in the long term the up and down pattern is likely to continue as the euro zone is far from stable.

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Moody's cut the euro zone's outlook rating to negative.

Mortgage bond prices are near unchanged on the day holding the strong gains from Friday afternoon.

There was no data first thing this morning. ISM Index @ 49.6, expected @ 50.

The recent positive movement in rates has been attributed much to comments by the Fed Chairman. Federal Reserve Chairman Bernanke told the audience at the Jackson Hole Symposium that the governing body was concerned over the outlook of the economy. The stagnation of the labor market was a “grave concern” and that long-term unemployment could wreak structural damage to the economy. He said inflation remained tame allowing for further action to help the labor market. Mr. Bernanke took the opportunity to defend past actions from the Fed following critical remarks from lawmakers. His comments left little doubt that future easing will be tied to employment.

Fannie and Freddie announced an increase to the guarantee fee this morning. The fee will increase by 10 bps in rate or roughly 3/8’s of a discount point. You can expect to see this as an increased cost in your rates very soon if not already.

Moody's cut the euro zone's outlook rating to negative. We haven't gotten much traction from that news yet this morning.

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