Friday, May 04, 2018 / by Kim Bryson
Despite a wide range of major economic news, it was a very quiet week for mortgage rates. The key labor market report, the inflation data, and the Fed meeting caused little reaction. Mortgage rates ended the week nearly unchanged.
The economy added 164,000 jobs in April, below the consensus for an increase of 190,000. However, upward revisions added 30,000 jobs to the results for prior months, bringing the net gains very close to the expected levels. The unemployment rate declined from 4.1% to 3.9%, below the consensus of 4.0%, and the lowest level since December 2000.
There are two factors which influence the unemployment rate, and the decline was mostly due to workers leaving the labor force rather than job gains, so it was not viewed as a sign of strength. Average hourly earnings, an indicator of wage growth, fell slightly short of expectati ...
Friday, April 20, 2018 / by Kim Bryson
Retail Sales Rebound
Strangely, mortgage rates moved higher during the second half of the week without a clear cause. The economic data released this week produced little reaction, and there was not much change in the stock market. Still, mortgage rates finished near the highest levels in several years.
There are several big picture factors which are viewed as negative for mortgage rates, but investors have been aware of them for months. First, the supply of bonds issued by the Treasury is increasing due to larger government deficits resulting from policy changes. Yields generally need to rise to entice investors to purchase additional bonds. Second, the Fed has been very clear in stating that it is tightening monetary policy by raising the federal funds rate and reducing its enormous holdings of Treasuries and mortgage-backed securities. This also adds to the supply of bonds. Finally, global economic growth in recent ...
Friday, April 06, 2018 / by Kim Bryson
Weaker Job Gains
Investors were focused on Friday's Employment report and the policy on tariffs this week. Despite unexpected results on both fronts, however, there was little reaction in mortgage rates, and they finished the week nearly unchanged.
Against a consensus forecast of 175,000, the economy added just 104,000 jobs in March. In addition, downward revisions subtracted 50,000 jobs from the results for prior months. Even with the shortfall, however, the economy has added an average of 202,000 jobs per month during the first three months of 2018. The unemployment rate was flat at 4.1%.
Average hourly earnings, an indicator of wage growth, slightly exceeded expectations. They were 2.7% higher than a year ago, up from an annual rate of 2.6% last month.
On Thursday, President Trump threatened to add an additional $100 ...
Friday, March 30, 2018 / by Kim Bryson
It was a relatively quiet holiday-shortened week for mortgage markets. The economic data contained no major surprises and caused little reaction. Mortgage rates finished the week a bit lower.
As expected, the most recent inflation data revealed a slight increase. In February, the core PCE price index was 1.6% higher than a year ago, up from an annual rate of 1.5% last month. This was the highest level since May 2017. Fed officials have stated that they would like to see the annual rate of inflation rise to 2.0%.
On Wednesday, gross domestic product (GDP) for the fourth quarter of 2017 was revised higher from 2.5% to 2.9%. This is the broadest measure of economic growth. GDP for the first quarter of 2018 will be released on April 27, and the current consensus forecast is forgrowth o ...
Friday, March 23, 2018 / by Kim Bryson
Retail Sales Drop Again
It was a relatively quiet week for mortgage rates ahead of the Fed meeting on March 21. The primary surprise was a decline in retail sales, which was positive for mortgage rates, and rates finished the week slightly lower.
Consumer spending accounts for about 70% of economic activity in the U.S., making the retail sales data a highly anticipated report each month. Following the hurricanes last fall, retail sales were very strong for three months, causing most economists to expect that consumer spending would remain strong in 2018. This has not been the case however. Wednesday's report revealed that retail sales in February unexpectedly declined for the third straight month.
One result of the weaker than expected retail sales data seen over the last few months is that ma ...