Coffee With Greta: This Is Not What the Fed Wants to See
DJIA Futures: -292 (-1.0%)
SPX Futures: -37 (-1.0%)
NASDAQ Futures: -120 (-1.0%)
Good morning friends!
Futures are falling after a big two-day rally as new data shows the labor market maintaining strength amid the Fed’s inflation fight.
Let’s get right to it!
Private Sector Adds More Jobs Than Expected in September
Private employers added more workers than expected in September in a sign of the labor market maintaining strength in the face of the Fed’s aggressive tightening.
Payroll firm ADP reported the U.S. private sector added 208,000 jobs last month vs 200,000 expected.
That was up from the revised 185,000 in August.
Trade, transportation, and utilities saw the largest growth adding 147,000 workers.
Wages also continued to rise with annual pay up 7.8% year over year.
This data is not what the Fed wants to see in its fight against inflation.
Central Bankers have previously said they need to see a slowdown in the labor market for inflation to slow.
The Labor Department releases the official September jobs report on Friday.
That’s expected to show the economy added 275,000 jobs last month with the unemployment rate unchanged at 3.7%.
Trade Deficit Hits 15-Month Low
The U.S. trade deficit fell to a 15-month low in August.
The Commerce Department reported the U.S. ran a deficit of $67.4 billion.
That was down 4.3% from July, the fifth monthly decline in a row.
It was also lower than economists’ expectations for $67.7 billion.
Exports fell 0.3% to $258.9 billion while imports dropped 1.1% to $326.3 billion.
Mortgage Demand Plummets
Mortgage demand plummeted last week as higher rates and Hurricane Ian pressured buyers.
The Mortgage Bankers Association reported total application volume dropped 14.2% weekly, to the lowest level since 1997.
Purchase applications fell 13% weekly and 37% year over year.
Refinance applications were down 18% weekly and 86% annually.
The drop came as the average 30-year fixed contract rate rose to 6.75% from 6.52%, the highest since 2006.
The higher rates pushed more homebuyers to turn to adjustable-rate mortgages.
ARMs made up 11.8% of the mortgage applications last week, up from 8.5% a month ago and around 3% at the start of 2022.
Oil Prices Flat as OPEC+ Meets
Oil prices are flat today as OPEC+ meets to consider a production cut.
West Texas Intermediate crude futures are just above $86.50 bbl while Brent crude futures are just under $92 bbl.
Sources told Reuters OPEC+ will consider output cuts as large as 2 million barrels per day at today’s meeting.
The American Petroleum Institute reported Wednesday that U.S. crude inventories fell by 1.8 million barrels last week and gasoline inventories dropped by 3.5 million barrels.
The Energy Information Administration reports official supply levels later today.
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