The ADP Payroll yesterday showed better than expected employment
gains for November. The monthly ADP report is always closely watched as
it foreshadows the monthly Unemployment Rate to be published on the first
Friday of every month – November’s unemployment numbers will be published this
Friday. The 215k jobs gained for the month by ADP overshoots the survey
expectation of 170k and last month’s employment gains for ADP were revised
upward by 54k jobs as well. The strong report points to a strong
employment report on Friday and modestly increases the likelihood of a Fed
Taper at its December meeting.
Mortgage spreads to 7 year treasuries have now widened
~10+bps since the recent lows seen in at the start of last month.
Continuing what has been a recent theme, until and unless data or announced
policy changes the trajectory of the recent spread movement in the
mortgage market, we expect spreads to continue to slowly drift wider.
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