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Market Matters, November 11, 2017 Edition

By Oscar Busch

Mortgage and Lending with Brand Lending Company NMLS# 1326698

November 11, 2017 11:10 AM

September Job Openings rose to 6.093mln, an increase of 3k over the prior month’s revised 6.09mln print. The job openings rate was 4% in September, unchanged from August, and now .2% higher than a year ago. The largest increases in job openings for September came in professional and business services (+156k), while the largest decrease was seen in accommodation and food services (-111k). Looking at the number of hires, we see a decline of 47k, now lowering the rate to 3.6%. Total separations also declined, dropping 33k, but not enough to change the overall rate of 3.6%. Finally, the quits rate rose .1% to 2.2%, returning to its highs seen back in May and July.

Mortgage applications for the week ending November 3rd were unchanged with purchase apps rising .5%, and refi apps dropping by .5%. Looking at purchase applications, those are currently 3.9% higher than a year ago, which should continue to support some gains in new and existing home sales.

Initial Jobless Claims for the week of November 4th saw a rise of 10k to 239k, up from an unrevised print of 229k in the previous week. The market call was for claims to rise to only 232k so the number was above expectations. Looking at the 4-week moving average, claims have fallen to 231,250 from a previous 232,500.

The House Ways & Means Committee took their first step towards tax reform passing the tax bill on Thursday. It is now expected that a full House vote will occur sometime next week. In addition, the Senate released their version of the bill, with highlights such as seven tax brackets, no change to current mortgage interest deduction up to $1mln, delaying the 20% corporate tax until 2019, keeping tax breaks for 401k and charitable contributions, and increasing the child tax credit.

After a week of quiet data releases, we were primarily focused on the 10yr yield testing strong resistance at 2.31%, and hoping for a close below to further extend our bullish sentiment. While we put in two to three tests of that level during intraday sessions, we were not able to break below on a closing basis, thus giving the market room to possibly consolidate. We came into Friday’s session with 10s doing just that, trading back up in the 2.38% handle, not off a particular headline, but more because the technicals needed a breather. Looking ahead, we still keep a neutral to bullish bias, but we need to now hold the ~2.40-2.42% area for that bias to stick. If we do see a break and close above 2.42%, we can bet that our recent bullish run could be fading. For now, it’s a good idea to get your loans locked in, especially after a good week of stable pricing. Headlines are likely to be focused on tax reform as we head into the new week.

Oscar Busch