ADP’s Employment Report shocked the market with its “guess” for Friday’s payroll data estimate of minus 23K.  While ADP does not factor in any government hiring, economists had expected their estimate to be plus 40K.  With the “street” bulled up for a 200K to 300K positive jobs number, maybe ADP just threw a little cold water on their party.  Trouble with ADP is that they have a history of missing the number, and by huge margins more often than they get close.  To them, within tolerance is 3 standard deviations!

Chicago PMI was also released, down 3.8 points to 58.8.  The market was looking for a print of 61.  Within the index, the production component fell nearly 5 points but new orders fell only slightly.  Cutting to the chase, the market rallied off the data with mortgage backs up 4/32’s at their best levels.  The green on the screen was short lived as fast money types and hedgers used the opportunity to sell.  Fits well with what we’ve been talking about lately.  With the 10 year note up 6/32’s (yield 3.84%) and mortgage backs now off 3/32’s (widening spreads), price changes for the worse are in vogue.  Don’t miss the bus.  More in a few.