Markets start November with mixed results
Stocks and bonds started the day off in the green before getting smacked lower by stronger than expected job openings. The Federal Reserve pivot trade was in full force this morning after worse than expected manufacturing data sent signals to the market that the Fed may ease on hiking rates further at this accelerated pace.
While economic data has been mixed as of late, including historic inflation rates and slower growth, weaker than expected home price growth has many hoping the Fed rate cycle may soon come to an end.
What is the mortgage market doing ahead of the Federal Reserve announcement?
On light volume, mortgages had been up over a half point early on Monday, while the yield on the benchmark 10-year note sank below 4% to 3.92%.
Heading into the Fed decision tomorrow, MBS gave up nearly 20/32nds from the Monday morning highs. The risk tomorrow is to the downside with the Federal Reserve very likely to remain resolute in its goal of reducing inflation back toward the 2% target.
December is another story. Markets expect the Fed will likely deliver a 50bps rate hike. That decision will be completely data dependent.
How did jobs data look yesterday?
Pivot euphoria was short lived, as the September job openings report showed open positions soared by 437k last month. That’s a half a million new job listings in only one month! This also indicates that there are1.9 open jobs for every one available worker.
With the labor markets on strong footing, markets sold off as the Federal Reserve is now free to move forward in its fight to tame inflation without worrying of labor market disruption.
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