UMBS were down 13 bps in early trading.  S&P Futures are up 8.75 points

There are alarming headlines regarding seemingly under-reported labor market revisions hitting the mainstream today.  Given the big role or the labor market in the rate world these days, that seems highly relevant at first glance.  But as was the case the last time the QCEW (Quarterly Census of Employment and Wages) was revised, there was plenty of sound and fury with very little significance for markets.

Quarterly Census of Employment and Wages (QECW) for March 2024 = Revised down 818k

• So 1 in 3 jobs that they said were created – weren’t

It hit this morning.  It isn’t a new jobs number, and the market already expects a negative revision between 600k and 1m for the 12 months ending March 2024.  Why all the focus on this topic (which pertains to data that’s almost 6 months old)?  Because it was a very boring, low-volume, uninspired day for bonds despite incidental gains.

The FOMC minutes are due to be released at 2:00 pm today.

The September Fed Funds futures are leaning 67% towards a 25 basis point cut and a 33% chance of a 50 basis point cut.

At first glance, and based on conventional wisdom, today’s most relevant calendar consideration for the bond market should have been the 2pm release of the Minutes from the most recent Fed meeting.  In reality, however, it would have been hard for bonds to care any less.  This isn’t a surprise considering we already knew the Fed discussed cutting in July and has all but promised to cut in September.  The day’s biggest source of inspiration was the confusion surrounding the scheduled 10am release of the QCEW payroll data as discussed in the AM commentary.

UMBS ended the day up 7 bps at 100.83

Mortgage banks posted a profit in the second quarter for the first time in two years. “Net production income was positive in the second quarter of 2024 – a welcome sign after eight consecutive quarters of net production losses,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis. “With a pickup in quarterly volume, productivity, and closings-to-applications pull-through, production costs dropped by about $1,800 per loan. These developments contributed to better net results, even as production revenues decreased from the previous quarter. Almost 80 percent of mortgage companies in the sample posted overall profits, including both production and servicing business lines. After two of the most challenging years in the mortgage business, many companies are seeing light at the end of the tunnel.”

The average profit was 17 basis points, compared to a loss of 25 basis points last quarter and a loss of 18 basis points a year ago. The average volume was $492 million, up from $384 million in Q1.