2nd quarter begins with a bang
Posted April 4, 2012 3:00 p.m. EDT
Normally in a week when the markets are focused on jobs as we are this week, activity leading up to the big employment report is relatively calm. Not this week however. After a quiet Monday and a relatively quiet Tuesday morning, bond yields went skyrocketing Tuesday afternoon after the most recent Fed Minutes were released.
The overall feeling from the Fed seems like additional easing is not likely, and unless there is a complete turnaround from where we’re heading (i.e. things get much, much worse), then that will continue to be the Fed’s position. The 10-year yield went from 2.16 to 2.30 in less than two hours Tuesday afternoon, and mortgage rates also saw significant upward movement as we ended the day on Tuesday.
Wednesday morning brought us the ADP Private Sector Employment Report which indicated growth of 209,000 jobs in March, continuing the job growth trend we’ve experienced over the past few months. One note here is that the number fell just short of expectations for the month, and it did lag a bit from the February number as well.
Mortgage applications for the week ending March 30 were up 4.8 percent. The increase is welcome news and somewhat expected given that we had seen a nice decrease in rates over the past couple of weeks. We’re not likely to see the same gains next week due to the sharp mortgage movement we experienced Tuesday. The increase was the first the index has seen in eight weeks.
Rates and yields have moderated Wednesday, with the 10-year back down to 2.23 by mid-afternoon. As is the case, any major deviation from consensus estimate on Friday’s Job Report could provide additional volatility this week for rates and yields.