Thursday, December 5, 2013 - Article by: Joe Shamie - First Choice Loan Services -
Thursday - December 5, 2013, 2:30pm ET
Current Trend Direction: Lower
Float/Lock Bias:LockingCurrent Price of FNMA 4.0% Bond: $103.50, -6bp
It's a Fed fueled bizarro world when good news is bad news for both Stocks and Bonds!
The government reported the 2nd reading of 3rd quarter Gross Domestic Product rose by 3.6% (3% expected) from the initial reading of 2.8%....the best level in a year and a half. Yah huh!!! But a closer look under the hood shows the gains coming from a large buildup in inventories. Boo! The actual consumer spending component of the report fell to 1.4% from 1.5%. In addition, final sales of produced goods also declined.
We are not going to be too bullish on the economy just yet. This is just one report, with weak internals and we saw a good report in last years third quarter, only to be followed by a miserable fourth quarter in 2012 and firstquarter 2013 readings. Taper talk will heat up, but todays print needs follow through in the fourth quarter otherwise we dont see the Fed tapering just yet.
Weekly Initial Jobless Claims fell by 23K to 298K versus 330K expected in the latest week to the lowest level since the week ended 9/7, though the decline could be skewed by the Thanksgiving holiday. Outplacement firm Challenger, Gray & Christmas reported that planned layoffs fell marginally from October to November (0.9%), but are down nearly 21% year-over-year in November. Good news for the job markets ahead of tomorrow's Non-farm Payrolls and Unemployment Report.
Jobs Report Strategy
Heading into the Jobs Report the strategy seems pretty simple LOCK. Why do anything else? The technical picture is and has remained weak and no one knows what this report will show or how the market will react?
Expectations are calling for 188K jobs created in November, down from the surprise 204K created in October. Seeing how the recent reports have went, including better than expected Claims and ADP, it would not surprise us to see a number come in north of 200,000which could really pressure Bonds.
Joe Shamie NMLS # 241432
First Choice Loan Services NMLS # 210764
First Choice Bank NMLS# 177877
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