Jobs are Up, Mortgage Securities are Down

We got some relieving news in the job market this morning. On Wednesday, we addressed how the ADP National Employment Report came in low and we hoped that the BLS report looked more optimistic as it holds more weight in the market. The BLS expectation for jobs created in October was 600k while the report came in about 6% higher at 634k jobs created. In addition to this gain in jobs, we saw a full point decrease in the unemployment rate. The last report showed 7.9% and expectations were that it would fall to 7.7%. Instead, it fell to 6.9% – a 224m increase in employment.

Forbearances across the country are down to their lowest point since the pandemic started. Active plans fell by 137k (5%) during the week to 2.86m. At the beginning of October, 700k active plans had been set to expire between the beginning of October and the end of November.

Mortgage backed securities are down this morning after Wednesdays huge gain. Mortgage backed securities have a good amount of room to fall before they have a recently tested floor of support. Because of this, we are holding a strong locking bias.