Yesterday’s market update was on point, with the prediction that bond prices would fall happening today. Mortgage interest rates are setting new seven-year highs, surpassing the highs achieved a couple weeks ago. Since we are in waters that the bond market has not chartered for seven years, it becomes more difficult to say where pricing will find a bottom and rates will stabilize. The yield on the 10-Year Treasury Note is now at 3.16%, which is also in waters not chartered for seven years. This climb higher is helpful for the Fed, as it will widen the gap in the yield curve and give the Fed room to continue to hike short term rates.
ADP released their estimate of new job creations in the month of September, and it was much stronger than the market anticipated. The report showed 230,000 new jobs in September, which far surpassed estimates of 1749,000, and is the highest monthly figure reported in seven months. In addition, the prior month was revised higher by 5,000. This now sets the odds of a stronger than expected Bureau of Labor Statistics (BLS) report when it is announced this Friday.
Expect volatility to continue. We remain in a locking stance.