| Last | Change | Percent | |
| S&P Futures | 1603.4 | 11.1 | 0.70% |
| Eurostoxx Index | 2736.0 | 17.1 | 0.63% |
| Oil (WTI) | 95.21 | 1.2 | 1.30% |
| LIBOR | 0.275 | 0.002 | 0.73% |
| US Dollar Index (DXY) | 82.43 | 0.204 | 0.25% |
| 10 Year Govt Bond Yield | 1.70% | 0.07% | |
| Current Coupon Ginnie Mae TBA | 106 | -0.5 | |
| Current Coupon Fannie Mae TBA | 104.2 | -0.3 | |
| RPX Composite Real Estate Index | 193.8 | 0.5 | |
| BankRate 30 Year Fixed Rate Mortgage | 3.42 |
Markets are higher this morning after a better-than-expected jobs report. Bonds and MBS got whacked on the number.
Payrolls increased by 165,000 in April and the unemployment rate fell to 7.5%. March was revised upward from 88k to 138k. The labor force participation rate remained at 63.3%, the lowest since the 70s. Retail and business services added jobs, while construction was surprisingly flat. The average workweek fell, while average hourly earnings ticked up by 4 cents.
The CBO has come out with a study saying that principal mods on Fannie and Freddie mortgages could save the taxpayer money by reducing delinquency and foreclosure costs and increasing economic growth. As far as the moral hazard issue - they dismiss the costs of moral hazard as "relatively low," provided the government requires sufficient evidence of financial hardship. The study basically assumes that the government will thread the needle with drafting rules to prevent strategic defaults. The study reminds me of the old joke where an engineer and an economist are stranded on a desert island with an unopened can of soup. The engineer proposes to use a rock to open the can. The economist says "assume a can opener."
Lloyd Blankfein sees the current environment as a parallel of 1994. Borrowers had become so used to low interest rates that they weren't ready when the Fed started hiking rates. Old timers will remember that was when Orange County blew up as mortgage backed securities got clocked.
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