Small Miss On Job Gains
There was some good news to be had at the conclusion of a tumultuous week on Wall Street. Slowing global growth and a slight miss on jobs numbers helped to push mortgage rates to their lowest levels that we have seen in the past two months. This weakening in growth rates has analysts less concerned about inflation which is reflected in the lower mortgage rates.
While the report released on Friday did reflect a decent level of growth in both wages and job numbers, it missed the expected level of 190,000 by about 35,000 new jobs, coming in at 155,000 new jobs created in November. Unemployment remained at 3.7% and with revisions, the average monthly gains for the year are at 206,000. Many market watchers are concerned about increased wage growth and the pressure that can put on earnings and overall corporate growth. Those fears were somewhat justified with the report that the growth rate remained at 3.1% for a second month in a row which equals the highest rate since '09.
The week also saw the further chatter that the Fed may back off its scheduled rate hikes following the quarter point rise expected later this month. Both economists and market watchers are speculating that the previously expected hike in March may not materialize until June, but at this point, that is only speculation. Add the increased confusion surrounding the ongoing trade talks with China and traders are feeling a lot less bullish. The upcoming week will likely reveal more about the implications of Canada's arrest of Huawei CFO, Meng Wanzhou and her possible extradition to the U.S. It goes without saying that the Chinese government is not happy about this development, but its effect on the overall trade talks remains to be seen.
The upcoming week will bring us CPI numbers on Wednesday which will help analysts gain more clarity on changes to the current rate of inflation. Friday's schedule includes Retail Sales figures which will shed some light on consumer confidence and buying activity. This is always a closely watched data point as consumer spending makes up an estimated 70% of the total US economy. Further activity that could influence rates is the ECB meeting on Thursday and Friday's Industrial Production report. All in all, it should be another volatile week with so many unanswered questions about trade relations with China. Stay tuned! Our office is ready to speak with you anytime 239-514-2674!