Dec 5th 2015 MARKET UPDATE
MBS are up +3/32 (FNMA 30-yr 3.5 at 103.06), around 7/32 lower than yesterday at this time. Unfavorable repricing took place yesterday. Early investors may have priced at lower levels.
It has been an interesting morning. Following the release of the Employment data, MBS prices dropped to a low of -8/32 and then quickly recovered. Against a consensus forecast of 190K, the economy added 211K jobs in November. Upward revisions to prior months added another 35K. The Unemployment Rate remained at 5.0%, as expected. Average Hourly Earnings, a proxy for wage growth, also matched expectations and were 2.3% higher than a year ago. The solid labor market data made investors nearly certain that the Fed will hike rates at the next meeting on December 16. Separately, the October Trade Deficit was larger than expected. The Dow is up 150 points. No more economic data will be released today.