Thursday, March 3, 2022

Daily Market Report 3/3/22  We're seeing improvement with Jobs, as Challenger Layoffs dropped nearly 5 million in February to 15.245.  These are announced layoffs.  The second Jobs data for this week is the Weekly Initial Jobless Claims, which dropped down to 215k for last week.  However, we didn't see much movement on Continued Claims.  They were mostly Unchanged.  Unfortunately, Labor Costs were revised much higher from it's initial reading of 0.3% for the Q4, and came in at it's final number of 0.9%.  This is important because it is inflationary.  Higher Labor Costs lead to higher costs to products and services; thus, passing that onto the Consumer.  Productivity remained Unchanged at 6.6% for it final Q4 reading.  Factory Orders are doing much better than anticipated.  It's December data was revised from -0.4% to +0.7%.  It's forecast for January was 0.7%, and it came in at 1.4%.  Unfortunately, the Services Sector didn't fair as well as the other data, as the ISM Non-Manufacturing PMI reported that it dropped from 59.9 in January to 56.5 in February.  Anything above 50.0 is considered expansion/growth.  Fed Chair Powell is in his second day speaking before Congress (today with the Senate Committee).  We learned yesterday that the Fed intends to hike rates at it's March FOMC by only 0.25%, in lieu of many reports of a 0.5% hike.  Today, he mentioned that the Fed will proceed slow and steady, as it will allow some flexibility due to the Ukraine/Russia War.  It's being speculated that it means approximately 3 rate hikes over the next few FOMCs and possibly take a break at it's June meeting to decide any further direction.  Both Stocks an Bonds have been Up and Down today, like a seesaw.  MBS had seen some price improvements earlier on; however, it had deteriorated to nearly Unchanged levels.  We could possibly see Lenders reprice for the worse, which will put pricing back to Unchanged from yesterday's close.  Unfortunately, we closed Down 93bps yesterday; so, all the gains made on Monday and Tuesday were wiped out from yesterday's Market reactions.  Yields are currently at 1.85%.

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