MBS Pricing Snapshot

- June Factory Orders +1.5 vs +2.3 consensus
- excluding aircraft and defense +0.9 vs +0.7 previous

Market Reaction: mild net positive for bond markets. 10's are still hanging around just under the 2.62 inflection point.

New orders for manufactured durable goods in June increased $9.9 billion or 4.2 percent to $244.5 billion, the U.S. Census Bureau announced today. This increase, up four of the last five months, followed a 5.2 percent May increase and was at the highest level since the series was first published on a NAICS basis in 1992. Excluding transportation, new orders increased slightly. Excluding defense, new orders increased 3.0 percent.

Transportation equipment, also up four of the last five months, led the increase, $9.9 billion or 12.8 percent to$87.1 billion. This was led by nondefense aircraft and parts, which increased $6.5 billion.

- NFP +162k vs +184 f'cast
- June revised to 188k from 195k
- May revised to 176k from 195k
- Labor force participation rate: 63.4 vs 63.5 previously
- Private payrolls +161 vs +189 f'cast
- Avg workweek 34.4 vs 34.5 previously
- Unemployment rate: 7.4 pct vs 7.5 f'cast, 7.6 previously

Market Reaction: Initial positive pop in both MBS and Treasuries saw 10's hit firm resistance at the 2.62 inflection point, they've since circled back to test a breakout in good volume and are currently at 2.613, which is still a bit too close to "confirm the breakout test." Fannie 3.5s are up 27 ticks and 4.0s are up 23 ticks to 103-27--almost back to yesterday's opening levels.

Total nonfarm payroll employment increased by 162,000 in July, and the unemployment rate edged down to 7.4 percent, the U.S. Bureau of Labor Statistics reported today. Employment rose in retail trade, food services and drinking places, financial activities, and wholesale trade.

The average workweek for all employees on private nonfarm payrolls decreased by 0.1 hour in July to 34.4 hours. In manufacturing, the workweek decreased by 0.2 hour to 40.6 hours, and overtime declined by 0.2 hour to 3.2 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls decreased by 0.1 hour to 33.6 hours.

In July, average hourly earnings for all employees on private nonfarm payrolls edged down by 2 cents to $23.98, following a 10-cent increase in June. Over the year, average hourly earnings have risen by 44 cents, or 1.9 percent. In July, average hourly earnings of private-sector production and nonsupervisory employees were unchanged at $20.14.

The change in total nonfarm payroll employment for May was revised from +195,000 to +176,000, and the change for June was revised from +195,000 to +188,000. With these revisions, employment gains in May and June combined were 26,000 less than previously reported.