Key Economic Data:
EUR / USD 1.4888 Up 0.0027
USD / JPY 90.620 Down 0.1050
GBP / USD 1.6572 Up 0.0018
OIL 80.17 Down 0.23
Gold 1,091.80 Up 4.50
FNMA 30-YR 4.5%
Previous close 100.813
Opened up 0.06BPs @100.875
Key Economic News:
Productivity and costs, and the usual weekly data…
8:30: Unemployment insurance claims…still stuck? For initial claims, median forecast (of 42) 522k, ranging from 510k to 535k; last 530k. For continuing claims, median forecast (of 17) 5.75 million, ranging from 5.73mm to 5.86mm; last 5.797mm. Initial claims remain stuck in the 500,000 to 550,000 range, and economists do not look for a breakout. Continuing claims have fallen, but much of this has been due to expiration of regular benefits, which are counted seperately. Both figures are beyond the refernce week for the October payroll survey.
8:30: Productivity and costs for Q3…labor cost trend will look lower. Median forecast (of 70) +6.5%, ranging from +3.8% to +8.5%; last +6.6%. For unit labor costs, median forecast (of 63) -4.2%, ranging from -6.3% to -1.9%; last -5.9%. The third quarter featured an even larger increase in nonfarm output (+4% annualized) than for real GDP. Coupled with a drop of about 3% in hours worked, this implies a productivity gain in the 7% area. Unit labor costs, meanwhile, continue to drop as compensation was flat overall.
10:00: Commercial paper data. The relatively lackluster levels of issuance continue to mask a seasonally adjusted improvement, mainly in issuance by financial firms, although a small increase in nonfinancial issunace a few weeks ago (seasonally adjusted) has held up.
16:30: Fed balance sheet data. The Fed’s balance sheet continues to hang at about the $2.1trn level, with reserves growing as the Treasury runs down its Supplemental Financing Program (SFP) balances. Outstanding balances in the liquidity and short-term credit facilities now stand at about $2.13bn, much less than the cumulative amount of agencies and mortgage-backed securities yet to be purchased. So the balance sheet will undoubtedly begin to grow in coming weeks as the Fed continues to book asset purchases.
Advice:
Nonfarm productivity soars as hours worked continue to plunge; claims better.
Actual +9.5% mom +4.3% yoy
Previous +6.6 mom
Consensus +6.5%
Released today at 8:30 (New York time)
Still waiting for unemployment numbers to come out, and this news will move rates. But by the time rate sheets come out pricing will have taken this into account.
My position on MBSs stays short today. (I’m a seller of MBS)
Based on nonfarm productivity and that I expect unemployment numbers to improve, I see no reason for interest rates to improve. I would lock today.
Click here for a short video that might Save you Hundreds of Dollars Every Month
Click here for a Rate Watch Adoption Form
Video Introduction to Ron Siegel
Click Here to View the Entire “Planning Your Credit Repair” Series.
Click Here to View the Entire “Planning A Home Purchase” Series.
Ron Siegel counsels clients in all matters Debt: Mortgage, Loss Mitigation / Loan Modification, Debt Settlement, Credit Repair. Reach on Ron Siegel at Ron@MBEhoa.com – 800.306.9130 – www.MBEhoa.com .
