According to ADP, there were 281,000 new jobs created in the month of June. This far exceeded expectations of 213,000, and is likely a signal that tomorrow’s Mac Daddy or Job’s Report, the BLS Report, will also be stronger than expected. As a result of the strong report, the stock market is at record highs and the bond market is falling. This is not good news for interest rates, which have moved about .125% higher since yesterday morning. Hopefully some of this movement is now pricing in a higher than expected report for tomorrow’s release. If so, the market’s reaction will be muted, as much of the losses will have been absorbed today.
Mortgage purchase applications were reported to be down 1% this week, as the housing market continues to show lack-luster results. Applications are a reflection of future purchase activity, so a disappointing number in applications projects a below expectations summer purchase market.
Markets are scheduled to close tomorrow at 12:00 p.m. MST, and will be closed all day Friday for the holiday weekend. With an abbreviated trading day, there may be wide market swings tomorrow. Coupled with the BLS Job’s Report, we may be in for a bit of a roller coaster until things settle down on Monday when the markets resume trading.
We will continue to suggest a locking bias to avoid the headline risks associated with tomorrow’s report. Hopefully, the bar has now been raised, so a stronger than expected report may be muted. We will let you know the results of the report in tomorrow’s update, and will let you know our feeling on the market going forward based on the outcomes.