AM Market Update

US treasuries better this morning; overnight the 10 yr yield fell to 2.41% down 7 bps frm  yesterday. By 8:00 the 10 yr at 2.45% -2 bps; stock indexes weaker early today. Treasuries getting some support over the roiling in Egypt where the government is about to collapse with the military saying it would negate the constitution if Mursi doesn’t step down, Mursi saying he will not. Why the concern? Because the Suez Canal may be in play disrupting the flow of oil through it; crude oil this morning now over $100.0 at $101.84

 

 8:15 the June ADP private jobs were up 188K, better than 165K generally expected; the stock indexes recovered a little and the treasury markets stood still with no movement, the yield on the 10 yr 2.45%. MBS prices at 9:00 unchanged frm yesterday’s 24 bp price decline. The ADP data was the second best of the year. Friday’s BLS June employment report is expected to show private jobs at +179K.

 

At 8:30 weekly jobless claims were -5K to 343K; not much different than what markets were expecting. The four-week moving average, a less-volatile measure than the weekly figures, decreased to 345,500 last week from 346,250. The number of people continuing to receive jobless benefits fell to 2.93 million in the week ended June 22 from 2.99 million in the prior period.

 

 

 

The Obama Administration surprised businesses yesterday by delaying the implementation of ObamaCare from the business sector frm 2014 to 2015. Businesses have complained that the law is so convoluted that they would have a difficult time to begin the insurance increase that ObamaCare will create. The delay takes away political fodder for Republicans in the 2014 elections. It isn’t being seen as a political move entirely; the law that impacts businesses is one of the most complex of the entire ObamaCare Bill.

  

At 9:30 the DJIA opened -26, NASDAQ -12, S&P -6; 10 yr note unchanged at 2.48% with mortgage prices general unchanged from yesterday’s closes.

 

Earlier this morning the weekly MBA mortgage applications showed re-finances crashed as rates have increased. The overall index -11.7%.  Interest rates are rising substantially, choking off demand for refinancing but only limiting demand for purchase mortgages. The refinancing index dropped 16.0% in the June 28 week and is at a two-year low. The purchase index, benefiting from what the Mortgage Bankers Association calls still strong home affordability, has been up and down is down 3.0% in the latest week. The average rate for conforming loans ($417,500 or less) soared 12 basis points in the week to 4.58%.

 

 

Nothing left now until Friday morning’s June BLS employment data; the current estimates are for the unemployment rate to have declined to 7.5% frm 7.6%, non-farm jobs +161K, non- farm private jobs +179K. As usual the data is not likely to match the estimates; the question for investors and traders, which way will the deviation take? It is unusual to have markets closed the day before the most important data of the month so positioning has to take place today before the early closes in stocks and bonds. The stock market will close at 1:00 this afternoon, the bond market will close at 2:00 PM.