Stocks are flattish as earnings continue to come in. Bonds and MBS are up small.
The House reached a deal to re-open the government, which heads to Trump’s desk today to sign. The BLS has already delayed Friday’s jobs report, but hopefully the overall disruption will be small this time around. Yesterday’s JOLTS job openings report was delayed as well.
The deal funds most of the government through the remainder of the fiscal year, however the Department of Homeland Security only got two more weeks of funding. Democrats want to add more guardrails to immigration enforcement, so the negotiations on this aspect will continue.
The economy added 22,000 jobs in January according to the ADP Employment Report. This was below expectations and indicates that the labor market continues its low hiring / low firing mode. “Job creation took a step back in 2025, with private employers adding 398,000 jobs, down from 771,000 in 2024,” said Dr. Nela Richardson, chief economist, ADP. “While we’ve seen a continuous and dramatic slowdown in job creation for the past three years, wage growth has remained stable.”
We saw a sizeable jump in education / health services with 74,000 new jobs, however that was offset by a big decline in professional / business services, where 57,000 jobs were lost.
Compensation growth continues to moderate with pay increasing 4.5% for job stayers (unchanged) and falling to 6.4% from 6.6% for job changers.
______________________________________
New Feature: Expanded Market Data with SOFR Swaps
You’ll notice our daily market data now includes SOFR swap rates, provided by Eris Innovations. These rates are derived from Eris SOFR Swap futures (native CME Group contracts), offering a transparent view of long-term rates.
Why this matters for your workflow: Since SOFR replaced LIBOR, it has become the universal benchmark for financing. Using SOFR swaps—rather than Treasuries—for modeling and hedging offers several advantages:
- Capital Efficiency: Swap futures require significantly less balance sheet than cash instruments.
- Precision Hedging: Liquid across the curve (out to 30 years), they allow you to isolate benchmark interest rate risk from credit spread exposure.
- Strategic Utility: Already widely used for hedging MSR portfolios, but they are also becoming the instrument of choice for hedging ARMs, non-QM, RTL, and key rate duration for Agency mortgage portfolios.
By benchmarking against SOFR, and easily trading this with Eris SOFR Swap futures, investors can more effectively monitor the “pure” credit spread of their mortgage assets, which can then be separately managed using Mortgage TBAs. Contact john.douglas@erisfutures.com to learn how Eris SOFR can help you improve your execution.
___________________________________________
Mortgage applications fell 9% last week as refis fell 5% and purchases fell 14%. Weather probably had a significant impact. “Application volume was down last week, led by a 14% drop in purchase applications. Winter Storm Fern likely had an impact as much of the country was snowed in, hampering homebuying activity,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “The annual increase in purchase applications was the weakest since April 2025. Refinance activity also decreased over the week, despite mortgage rates moving lower. The 30-year fixed rate averaged 6.21% last week, a slight decline, but not significant enough to incentivize more borrowers to refinance. Additionally, this week’s results are being compared to the week that included the MLK Jr. holiday.”
Private credit stocks like Blue Owl, KKR, TPG, Apollo have been getting crushed lately, which is something people in the mortgage business should watch. Blackrock TCP Capital Fund took a 19% writedown to net asset value last week and a lot of these funds have exposure to software companies.
While this doesn’t directly affect the mortgage business credit crises tend to spread and the area most likely to be affected is non-QM lending. With real estate prices flattening, average asking rents continuing to decline, overall suspicions about appraisal values there is the chance that the buy-side might pull back from the space.
Not saying this is imminent (they really are different spaces altogether) but credit problems can intensify and propagate to strange places.
