Daily Commentary by Larry Baer: Today's
March Factory Orders data matched perfectly with investors' expectations for a
decline of 1.5% -- and traders yawned.
There is nothing but tomorrow morning's Institute
of Supply Management Service Sector Index
and the initial weekly jobless claims figure for the week of April 28th
hovering in front of the release of the April nonfarm payroll data on Friday.
A few talking heads were trying to make a
big-deal out of the fact that private payroll firm ADP's National Payroll
Employment report showed employers only hired 119,000 employees in April, the
smallest monthly gain since September 2011.
I think it is very important to recognize this data series is not a very
accurate predictor of the government's far more important Nonfarm Payroll
headline figure. For instance ADP
overshot the government number by 88,000 in March, undershot by 87,000 in
January and overshot by 113,000 in December.
These misses are so broad most analysts simply shrug the ADP figures off.
Market participants are currently
anticipating the economy created 175,000 net new jobs in April - a nice improvement
from the 120,000 gain registered in March - but still well below the 250,000+
pace necessary to just keep up with the number of new entrants into the
workforce. If the actual number matches
or closely approximates the consensus estimate -- mortgage interest rates will
likely remain fairly steady at current levels.
In the off-chance the actual headline number exceeds 200,000 -- look for
surprised mortgage investors to react by pushing rates aggressively higher.
The Mortgage Bankers of America said overall
application traffic picked up just a touch last week. According to the MBA's Mortgage Application
Survey the number of applications taken for both refinance and purchase loans
inched 0.1% higher during the week ended April 27th. Purchase demand was up 2.9% for the week
while refinance requests edged 0.7% lower.
Refinance requests accounted for 72.6% of all applications taken during
the survey period. The contract rate for
30-year fixed rate conforming mortgages finished at 4.05%, up 1 basis-point
from the prior week, down 11 basis-points from four weeks ago, and down 81
basis-points from the year ago mark.
THE
MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
