Wednesday, July 31, 2019

Daily Market Report 7/31/19 ADP reported 156k new jobs in July, which is Up from it's 112k reported in June.  The Employment Cost Index rose only 0.6%, under forecasts of 0.7%, in Q2.  Annual Compensation Growth dropped from 2.8% to 2.7%.  The Fed likes reviewing this Index for possible Wage based Inflation.  It was a favorite for former Fed Greenspan.  This tells us that Inflation is tame.  Manufacturing in the Chicago region continued to contract, as the Chicago PMI reported that it dropped from 49.7 in June to 44.4 in July.  Any number below 50 is in contraction mode.  Stocks are lightly trading and in Mixed Territory ahead of the FOMC statement at 11:15am PST.  It is expected they will cut .25% from the Fed Funds rate, the first rate cut in more than a decade.  Investors will listen intently to Fed Powell's statement for any clues.  His statement could greatly alter the Markets today, so be on guard!  The US and China delegation continue with their Trade Talks without anything new to report.  MBS is currently Up 13bps, so Mortgage Rates will be better this morning.  But this could be short-lived!  Be careful!  It will be based on how the Investors feel after listening and reviewing the upcoming FOMC Announcement and Fed Chair's comments afterwards.  Yields have slid down to 2.04% and is testing it's 25 DMA.

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