Morning Report - meh jobs report

Vital Statistics:

	Last	Change	Percent
S&P Futures	1775.2	8.6	0.49%
Eurostoxx Index	3005.0	-5.8	-0.19%
Oil (WTI)	97.71	-0.1	-0.13%
LIBOR	0.234	-0.003	-1.27%
US Dollar Index (DXY)	80.71	-0.195	-0.24%
10 Year Govt Bond Yield	2.67%	-0.03%
Current Coupon Ginnie Mae TBA	105.9	0.0
Current Coupon Fannie Mae TBA	105	0.4
RPX Composite Real Estate Index	200.7	-0.2
BankRate 30 Year Fixed Rate Mortgage	4.29

Markets are higher after a weak jobs report. Bonds and MBS are up.

Jobs report data dump

• Payrolls + 113k vs +180k expected
• Prior 2 month revision +34k
• Unemployment rate 6.6% vs 6.7% expected
• Hourly earnings + .2%, in line with expectations
• Labor force participation rate 63%

Retailers cut back jobs after the holidays and government hiring fell. Construction added 48k jobs. Surprising to see weak payrolls in conjunction with a drop in the unemployment rate and a tick up in the participation rate, but it appears to have been driven by annual population adjustments out of Census. It is important to keep in mind that the Employment Situation report is a noisy report that is often very sensitive to modeling adjustments and revisions after the fact. It probably gets more attention than is warranted. This report seems more or less in line with what the Fed has been forecasting, so it shouldn't have any effect on Fed policy re QE.

Sellers are returning for the Spring Selling season, which should help alleviate the inventory problem. At some point, we should see the pros getting itchy to ring the register as well. What does this mean? Probably (a) more purchase transactions with a mortgage, and (b) a moderation in home price appreciation. Remember, cash sales have been 40% to 50% of all purchase transactions lately, and that number has been historically closer to 20%. Cut the cash transactions in half, and the gettable business increases by 30% to 60%, even if the number of existing home sales doesn't increase.

Immigration reform appears to be dead for the time being. The reason is that the right believes the WH would only enforce the parts of the law it likes based on the administration's fast and loose way of handling obamacare.