At 8:15 ADP reported its private jobs data for Jan; forecasts were for an increase of 200K jobs, as reported +170K. ADP revised Dec job growth from 325K to 292K. Prior to the rep[ort the 10 yr note traded lower by 8/32, the reaction to the weaker report briefly back to unchanged but by 9:00 back to -6/32 with MBS prices at 9:00 -1/32 (.03 bp). US equity market trading prior to the open at 9:30 had indexes trading higher in line with better markets in Europe. On Friday A the BLS report is forecast to show the U.S. added 145,000 jobs, according to 81 economists in a separate survey, compared with 200,000 the previous month. The unemployment rate is forecast to remain steady 8.5%.
China reported an unexpected increase in manufacturing today; that spurred rallies in Europe's markets. Borrowing costs in Italy fell slightly on sales to the lowest since October as stock gains spurred demand for riskier assets. Portugal's notes rose as borrowing costs declined at bill sales. The German 10-year yield rose two basis points, or 0.02 percentage point, to 1.81% at 1:52 p.m. London time after falling to 1.78% yesterday, the lowest since Jan. 18, and the same yield as US 10 yr notes.
At 9:30 the DJIA opened +75, the 10 yr note -10/32 back to 1.83% +3 bp, and MBS prices -3/32 (.09 bp).
Weekly MBA mortgage applications for last week out at 7:00 this morning. Mortgage applications decreased 2.9% from one week earlier, for the week ending January 27, 2012. The Refinance Index decreased 3.6% from the previous week. The seasonally adjusted Purchase Index decreased 1.7% from one week earlier. The four week moving average for the seasonally adjusted Market Index is up 4.11 percent. The four week moving average is up 2.48% for the seasonally adjusted Purchase Index, while this average is up 4.22 % for the Refinance Index. The refinance share of mortgage activity decreased to 80.0% of total applications from 81.3% the previous week. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 4.09% from 4.11%, with points decreasing to 0.41 from 0.47 (including the origination fee) for 80% loans. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 4.33% from 4.39%, with points increasing to 0.41 from 0.40 (including the origination fee) for 80% loans. This is the lowest 30-year jumbo rate since MBA started tracking the series in January 2011. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.96% from 3.97%, with points increasing to 0.61 from 0.57 (including the origination fee) for 80% loans. The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.36% from 3.40%, with points increasing to 0.41 from 0.40 (including the origination fee) for 80% loans. The average contract interest rate for 5/1 ARMs increased to 2.94% from 2.91%, with points decreasing to 0.39 from 0.41 (including the origination fee) for 80% loans.
