Rate Watch
As typical, the big news of the month was the Employment report. Even though the report came in fairly close to the consensus, the mortgage markets did not like the news. On Thursday, Freddie Mac’s weekly survey had released an average rate of 6.30 percent on the 30-year fixed rate mortgage. The benchmark mortgage product was down 1 basis point from the previous week. After the release of the Employment report on Friday, the small gains that were made earlier in the week vanished. Today, Bankrate.com’s weekly average was up 2 basis points to 5.82 percent from the previous week’s 5.8 percent.
The economy created 111K new jobs in September. This total was right on target with the Wall Street consensus. The Unemployment Rate dropped to 4.6% from 4.7%, giving investors the sense that the job market remained quite healthy. Investors must have expected the report to come up short. As you may have noticed, what is good for the American worker is not always a positive event for mortgage rates. This Employment report increased investor worries that economic growth and wage inflation may postpone a potential rate cut from the Fed, which would not be good news for the mortgage markets.
The markets are closed today for Columbus Day, so the week will start off rather slow. On Wednesday, the Fed will release the minutes from their FOMC board meeting. This detailed description of the discussion during the last Fed meeting will be eagerly scrutinized for clues about future policy. Friday’s Retail Sales report will be the only major economic data next week. Consumers account for about 70% of economic activity, and this report is a major indicator of their activity. Consumer Sentiment on Friday will round out the Economic Calendar, and provide us some further insight into this important sector.
posted by Vincent Biondillo @ 8:44 PM
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