The mortgage market is taking a beating this morning - driven by a report from private payroll company ADP indicating private employers added 297,000 jobs in December - well ahead of November's revised gain of 92,000. ADP said the December payroll increase was the largest single gain since it first began releasing the data in 2000. Even though the ADP numbers are notorious for falling wide of the government's far more important nonfarm payroll figures -investors decided to be "safe rather than sorry" and have been pushing mortgage interest rates higher all morning. This heavy selling pressure may soon prove to have been a mistake.



In a separate report a little later in the day, the Institute of Supply Management's Service Sector index, which covers about 90% of the economy, showed that while overall activity in industries ranging from merchants to health care, housing, finance, and food services improved 2.1% from November's levels - overall employment dropped 2.2% for December.




Hmmm - now there is a head scratcher for you. ADP says private employers were adding new employees to their payrolls by the thousands - but the government data says that their numbers show that employment actually declined during the month.



So which is it? Did private payrolls explode in December as ADP indicates or did private payrolls turn in a weak performance as the government data wonks say it did.



The correct answer probably lays somewhere in the middle. My bet is that Friday's December headline nonfarm payroll gains will fall within shouting distance of the consensus estimate calling for a net gain of 130,000 to 140,000 new jobs with the national jobless rate retreating fractionally to 9.7% from November's 9.8%. If this assessment proves accurate, it is highly likely the heavy selling pressure we've experienced in the mortgage market this morning will be largely reversed on Friday.