Market commentary

If the ADP employment report is to be a reasonable indicator, Friday’s payroll report could be encouraging. The ADP report projects that 206,000 private payrolls were created in November, well above expectations. The majority of the increases are coming from smaller businesses as those with 1 to 49 employees accounted for over half of the jobs.

Mortgage applications fell 11.7% for the week ending November 25 as applications for refinance dropped over 15%, despite lower mortgage rates. The four week moving average for the refinance index has fallen 16% over the past six weeks while mortgage rates have fallen 10 to 20 basis points.

As a result of the inability of Europe to solve their financial crisis, the world’s major central banks acted jointly Wednesday to provide dollar liquidity to major European banks that have been facing credit and liquidity problems as investors and depositors pull funds from those troubled banks. Global stock markets rallied sharply on the news, including the U.S., where the DOW is trading higher by 400 points. The risk-on trade is driving U.S. Treasury prices lower/yields higher. As a result, mortgage pricing is worse by .125% to .250%.