Morning Report: Blowout ADP number

Vital Statistics:

	Last	Change
S&P Futures	2281.5	7.0
Eurostoxx Index	364.3	4.0
Oil (WTI)	53.3	0.5
US dollar index	90.7	0.2
10 Year Govt Bond Yield	2.49%
Current Coupon Fannie Mae TBA	102.1
Current Coupon Ginnie Mae TBA	103.2
30 Year Fixed Rate Mortgage	4.16

Stocks are higher this morning after a good ADP number. Bonds and MBS are down.

The private sector added 246,000 jobs in January, according to the ADP Employment Survey. This is the highest number since June 2016. We saw strong growth in construction jobs and manufacturing, while finance was flat and IT fell. The Street is looking for a 175k nonfarm payrolls in Friday's report. The ADP number hasn't been a great predictor of the BLS number for a while, so don't read too much into it. While strong, this number will probably not change anything with respect to this afternoon's Fed decision, which comes out at 2:00 pm EST. 

Mortgage Applications fell 3.2% last week as purchases fell 6% and refis fell 1%, according to the MBA. The average rate for a 30 year fixed rate mortgage rose 4 basis points. Refis fell below 50% for the first time since 2015. 

More evidence that the manufacturing sector is turning around: The ISM Manufacturing index hit a 2 year high in December. Input costs rose to a 5.5 year high, which is spooking the bond market a little this morning. 

Construction spending fell 0.2% in December, missing expectations. It is up 4.2% YOY. Residential construction rose 0.4% and is up 3,6% YOY. 

Donald Trump nominated Colorado federal appeals court judge Neil Gorsuch to the Supreme Court yesterday to replace Anonin Scalia who died last year. Democrats are vowing to filibuster in retaliation for the treatment of Obama's nominee Merrick Garland. 

Distressed sales fell in October, according to CoreLogic and are now at the lowest levels since 2007. Cash sales came in at 32%, which is still elevated compared to pre-crisis levels. Normalcy is around 25% or so. 

The REO-to-Rental trade worked out for Blackstone, culminating in the IPO of Invitation Homes, which raised $1.54 billion in an IPO yesterday. The deal was priced at $20 a share, within the $18-$21 range. The stock begins trading today under the symbol INVH.

Should homebuyers wait until spring to purchase a home? It turns out the best months to purchase are January and February. Less competition means bigger discounts to the asking price.