Yesterday’s stunning weakness in the ADP Services employment report indicating the private sector created a paltry 38,000 jobs last month sent investors and analysts alike scrambling to downwardly revise their May job growth expectations. Prior to the ADP report the consensus estimate among economists suggested between 175,000 and 200,000 new jobs were created last month. These fearless forecasters have now reduced their estimates to reflect expectations that net new job growth in May was probably in the 100,000 to 125,000 range. All this eraser work contributed strongly to yesterday’s rally in the mortgage market. Should all these freshly revised May payroll projections prove reasonably accurate -- the headline news will likely prove to be anticlimactic in terms of its impact on the mortgage market.
In a second report, the Labor Department said this morning that nonfarm productivity grew at a slightly faster 1.8% annual rate in the first quarter, rather than the 1.6% pace initially reported. Wage growth remained muted, with unit labor costs rising at a 0.7% rate rather than the previously reported 1.0% rate. Mortgage investors yawned.
The coming week will be an exceptionally slow one with respect to scheduled economic news. Uncle Sam will dominate the credit markets from Tuesday through Thursday as he auctions $76 billion of 3-year note, 10-year notes, and 30-year bonds.
THE MARKET IS ALWAYS RIGHT! … YOU AND I ARE SOME OF THE TIME
