Strong Economic Data
Strong economic data released this week has unsurprisingly pushed rates upward. The expected result of the continued strong employment and wage data has helped to push mortgage rates higher. In fact, this week saw rates surpass heights that they have not seen in years. None of which is good news for rate watchers.
Rates saw their largest jump of the week on Wednesday following the ISM national services index report. This index began in 2008, and a reading over the 50 mark shows expansion in the sector. Wednesday's data showed the index at 61.8 which was much higher than expectations.
Jobs numbers for September were below expectations of 180,000 with 134,000 reported. Interestingly, August numbers were revised upward by 87,000 bringing the net number of new jobs inline with market forecasts. On average, the year-to-date figure for monthly job additions has been about 211,000; this compares favorably to the 2017 figures of 182,000 average new jobs per month. It is also likely that the September numbers will also be adjusted upward.
Another historic benchmark was reached this week in unemployment, with the rate dipping to 3.9% from 3.7% in August. This is the lowest rate in nearly 50 years, and many economists are stating that we are now at full employment levels. Consistent with August levels, the average hourly earning rate continued its rise at 2.8% over the same period last year. With wage rates steadily moving upward, all eyes will be on inflationary signals that may prompt the Fed to stick with their plan for further rate hikes.
There's not a lot of time to catch your breath as next week will see further economic data released following Monday's holiday closures. The Consumer Price Index (CPI) will be released on Thursday, and you can expect some updated analysis on this inflationary marker. Market watchers expect there to be some increase in prices for goods and services, but it is currently unclear if these changes will be enough to further move rates. Thursday is also the release day for the latest Job Openings and Labor Turnover Survey (JOLTS) that is expected to reflect a strong labor market.
The Treasury auctions that are slated for Wednesday and Thursday are the most likely events to move mortgage rates this week. Another busy week of economic reporting that will likely reflect increased growth and a strong job market, all of which may have a significant effect on rates.
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