MBS MID-DAY: Big Rally After Super Weak Wage Growth

Posted To: MBS Commentary

Today's market mover came out of left field, and in a big way. The Employment Cost Index is typically a non-event, having only moved markets noticeably one other time in the past few years. But it completely rocked them today. Chalk that up to the fact that it was the lowest quarterly wage growth in the history of the report , rising only 0.2% vs a median forecast of 0.6%. That means Q2 wages grew at only 1/3rd the pace expected! (Incidentally, Q1's pace was +0.7). After a flat overnight session, Treasury yields rocketed lower, and MBS jumped up more than a quarter point. Additionally, the discussion on the yield curve in this morning's commentary is timely as there were immediate implications for the curve. Reason being: the severe lack of wage growth suggests severe issues for…(read more)

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Source: Mortgage News Daily

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