Wednesday, February 2, 2010

Companies in the US added more workers than originally forecasted for the second month in a row according to ADP.  Employment increased by 187K last month after a revised 247K gain in December.  Most analysts were expecting an increase of about 140K new jobs in the private sector. 

 

Bigger payroll gains are needed to help bring down an unemployment rate that Federal Reserve policy makers say is too high. Friday’s Employment Report is forecasted to show companies added 140,000 jobs in January.

 

The escalating tension in Egypt is pushing stocks down; the Dow is currently unchanged.

 

MBA mortgage applications were up 11.3%; Purchases were 9.5% higher, while the Refinance index increased 11.7%.  Of note, applications for adjustable rate mortgages posted a weekly jump of +17.8%.  

 

Right now, the futures market is pricing in a 100% chance that the Fed keeps rates between 0% and 0.25% through June 22nd, 2011.  

 

Currently, the Ten Year yield is at 3.42% (3.43% yesterday) and the 2-10 yield spread is at 279bps, flattening 3bps since yesterday morning.   

 

MBS prices are currently up +1/32 (FNMA 30-yr 4.50% coupon is currently trading at 101.29), which is about 3/32 lower than yesterday at this time.