Mixed Data was Good News for Mortgage Rates
The shortened holiday trading week saw the rate of global growth slow, which coupled with some weaker than expected manufacturing data, helped to increase concerns about slower growth and what that reality means for the markets and rates. Fortunately, labor data was quite strong which helped to nudge mortgage rates slightly lower. Fed Chair Powell also shared on Friday that the Board is essentially taking a pause on rate hikes, information that was met with exuberance in the equity markets.
With previous monthly reports revised upward some 58,000 jobs while the December numbers came in at a staggering 312,000, recession fears also increased. Analysts had expected about 180,000 to be added to the labor force in December and were stunned when the data was announced. However, somewhat counterintuitively, the rate for unemployment grew to 3.9% from 3.7% which is being attributed to more people trying to enter or re-enter, the work force. Overall, this is considered a positive result for growth, but also a sign of the possibility of increased future inflation.
Wages continued to improve, with the annual rate increase on par with the highest growth which occurred in April of 2009. Average hourly pay is 3.2% above last year's results and a stronger increase than the 3.1% realized in the previous month.
Of course, it was not all good news. Manufacturing is down, with the ISM index reaching 54.1 from 59.3 which was well below the expected level of 58.0. 54.1 represents a low that we have not seen since the November 2016 report. While this still represents an expansion in overall manufacturing, the drop-off is cause for concern.
The first full trading week of 2019 will include the release of the ISM services index at the start of the week. Wednesday will see the distribution of the minutes from the Fed's meeting on December 19th. It is likely that the minutes will be closely scrutinized by analysts in an attempt to glean further insight into the Fed's current state of mind. At the end of the week, CPI numbers come out and will shed further light onto the current state of inflation. The Treasury auctions at the middle of the will also have some impact on current rates for mortgages.
If the government shutdown continues, it is likely that data compilation and report releases will start to be impacted. We are here to guide you through the loan process! Call us today at 239-514-2674 or apply online now!
This blog is for imformational purposes only. Rates, guidelines, programs are subject to change without notice. NMLS #1743702