Update #4/ Week of May 31, 2010

Good Morning Everyone and Happy Thursday! The stock markets enjoyed quite a rally yesterday especially in the latter half of the day. News of positive retail sales from the three big auto makers helped to keep the rally going all through the afternoon. The Dow closed up 226 points by the end of the day. This rally helped to fuel rallies over seas as the Nikkei and the Hang Seng both closed up over 3% early this morning. Today we take a little breather as traders attempt to digest the veritable buffet of economic news on the wire this morning.

The first report released this morning in regards to the US economy was the latest ADP Employment Change report which told us that payrolls from private corporations increased by 55K in May. This number was a bit of a disappointment as analysts were looking for 70K. This off 10K from the upwardly revised number of 65K in April. Tomorrow the Labor Dept reports its Unemployment figures and will tell us how many jobs were created from their analysis. Initial Jobless Claims for the week ending May 29 came in at 453,000 – down 10K from the week previous, but not much of an improvement. Continuing jobless claims actually increased 31K from last week . . . the wrong direction for those claiming the employment situation in our country is getting better.

First Quarter nonfarm productivity’s final reading showed an increase of 2.8%, down from the 3.6% in the last revision. Unit labor costs for Q1 fell 1.3%, which is good, but not as good as the 1.6% anticipated. Factory orders for April increased 1.2%, but not as good as the 1.7% expected. We have a pattern here, can you see it? The ISM Services Index for May did come in at 55.4, almost at analysts expectations of a 55.6 reading. Most of the reports this morning were disappointing, and missed expectations. Thus the weakness in equity markets today, and the subsequent quieting in credit markets. (thank you!)

We did get a price worsening yesterday in mortgage rates when the stock market shot up like it did, and those rates are holding this morning. We’re about .375 in rebate off where we started yesterday morning on our fixed conforming product. Not too bad. Tomorrow will be an exciting day to be sure. I’m out in the field today and tomorrow. Call me if you have any loan scenario or pricing questions. Have a terrific Thursday!