Phil Grossfield's Blog

A LITTLE EXTRA…

I Was John Travolta; Jobs Report Tomorrow

travoltaI Was John Travolta.  I must be John Travolta…why else would I put in my post yesterday that I love Jimmy Carson?  JOHNNY Carson…I love JOHNNY Carson.  Man!  So if you’re completely lost as to why I would claim I’m John Travolta it’s because he monumentally screwed up the pronunciation of Idina Menzel’s name when he introduced her at the Oscars.  IT WAS BEAUTIFUL…I’ve watched it a dozen times.  See it here on Conan in first 20 seconds.

Want to master the art of saying the wrong name?  There’s a website for that.  Yes, here you can enter any name and it will tell you exactly how John would say it…here’s your chance to be just like John Travolta. 🙂


jobsreport2My Market Watch:  Bonds Down Just -6bps.  Jobs Report Tomorrow.  The Fannie Mae 30-Year Bond is down but only by -6bps since yesterday’s close.  Generally a lender’s rates/pricing get worse when the bond loses ground.  I usually attribute 0.125 in price to about 20-25bps or so.  So, since the bond is only down -6bps rates/pricing should be the same as yesterday.

Tomorrow are the big Jobs and Unemployment Reports…these reports traditionally has the power to significantly influence trading. A trader’s job is to buy low and sell high. Therefore, traders try to predict what will happen and invest accordingly. If the either report is off, then traders will react based on how well they guessed.

Jobs_Report_AnalysisThe Jobs Report tells us how many new jobs were created in February and the Unemployment Rate tells what percentage is out of work.  If the Jobs Report shows more new jobs than expected (indicating a stronger economy), then traders will invest in the stock market.  In order to free up money to invest in stocks, traders will sell off bonds and when that happens our rates/pricing get worse.  Conversely, if the Jobs Report shows less new jobs than expected (indicating a weaker economy), then traders will sell their stocks and invest in safer bonds instead.  When that happens our rates/pricing get better.  I hope that makes sense.

The Unemployment Rate has a similar analysis…if the unemployment rate goes up, it means a weaker economy, right?  More unemployed = weaker economy.  If the unemployment rate goes down then the economy should be considered stronger.

Traders try to predict what will happen and react sharply when either report is significantly off.  For example, if there are a ton more or less jobs created than expected, then the amount of stocks and bonds traders buy or sell goes up greatly.  It is expected that 150,000 new jobs will be reported and the Unemployment Rate will be 6.6%. The number of expected new jobs seems low to me…I’m betting it comes in higher.  Therefore I advise locking today before the report is published.  But MBS Highway disagrees with me…they think less new jobs will be reported and they are recommending you float your locks until after the report is published.

Please do your own research and rely on the same before you decide to lock or float your loans. Feel free to call me to discuss….

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