THE BASIS POINT

Job Growth Unimpressive. What Happened Yesterday?

Jobs (March 2012)
– ADP Private Sector Jobs +209,000.

– Previous was 216,000. Revised Previous was 230,000.

– ADP is a private payroll provider that processes payrolls for about 23 million employees throughout the U.S.

Full report

As I have been saying: considering how far we are into recovery jobs growth is still small.

We’ve got jobless claims tomorrow and the BLS Jobs report Friday (previews).

Mortgage Applications (week ended 3/30)
– Purchase Index – Week/Week 7.2%

– Refinance Index – Week/Week 4.0%

– Composite Index – Week/Week 4.8%

Refinancing applications are affected by volatile rates and by the increase at the start of the month in FHA premiums.

ISM Non-Manufacturing Index (March 2012)
– Index level 56.0. Previous was 57.3, consensus was 57.0.

– For this index, 50 is dividing link between expansion and contraction

– March is the 27th month of expansion

– In addition to measuring manufacturing, the Institute for Supply Management also has this survey which measures services industry activity in areas like Real Estate, Transportation, Hotel/Restaurant, Construction, Entertainment, Utilities, etc.

-Table with more details below

Yesterday
So what happened with the big MBS selloff yesterday? This is a message I just sent to the big boss in my firm:

The reality is that from day to day markets are made by the marginal players – people in positions for the short term. These people are more readily induced to buy and sell based on extremely incomplete analysis of what the **** is happening. The people who sold yesterday presumably thought there would be another QE and sold when the Fed said “I don’t think so.”

Lepre’s rule says, “In the short run rubes make the markets. In the longer run, investors pick up rubes’ money.”

Today we’ve regained half of yesterday’s 81 basis point loss in the benchmark Fannie Mae 3.5% coupon. That selloff caused rates to rise about .375%, and now rates are “only” up .25%.

Main catalyst: a weak Spanish bond auction that reminded markets of Europe’s long-term challenges.