Wednesday, October 30, 2019

Daily Market Report 10/30/19 The ADP Employment reported 125k new jobs for October, which is up from 93k in September; however, September was revised lower by 42k from it's initial report.  The Q3 GDP dropped slightly from it's annual pace of 2.0% to 1.9%, which is better than expectations of 1.6%.  This is pretty good, as the Trade Negotiations have been taking a toll on our economy, and slowing many industries.  The FOMC will wrap up their 2 day meeting today and provide their announcement at 11am PST, then Fed Chair Powell will have his press conference at 11:30 am PST.  It is widely expected that the Fed will cut it's Fed Funds Rate by a 0.25% for the 3rd time this year..  Investor will heavily listen to the Fed today, as they will gauge any further hikes and the Fed's thoughts.  Many are thinking that the US and China talks are progressing, then the Fed may hold on further cuts.  They need to hold some ammo, if/when we reach an recession; otherwise, there's not too many tools to help stimulate an economy available.  Stocks are moving in Mixed Territory, as they've been dipping their toes (in all 3 indices) in both Positive and Negative Territory this morning ahead of the FOMC Announcement.  Q3 Corporate Earnings continue to come in relatively good on lower expectations.  MBS is Up 16bps, so Mortgage Rates are better this morning.  Be careful today, because if the Fed says anything inflationary, then it could reverse very quickly, as the greatest enemy to MBS is inflation.  Mortgage Rates and Fed Funds Rate don't always move in same direction.  When there are Fed cuts, then many times, Mortgage Rates rise due to concerns of inflation.  Yields are trying to stay above it's 100 DMA, but are currently just underneath at 1.81%.  It's next level is the Fibonacci, which may be strong, as it was holding as a ceiling for many tries to break above.

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