Happy Friday! A touch of spring and the harsh reality of winter again. Everyone seemed to really enjoy last week's review. From MBS Quoteline, this crazy week and what happened. Stay safe and warm.
Strong Job Gains
Friday's stronger than expected Employment data was great news for the economy, but it was negative for mortgage rates. As a result, mortgage rates ended the week higher.
The Employment report revealed strength nearly across the board. Against a consensus forecast of 240K, the economy added 295K jobs in February. The Unemployment Rate declined from 5.7% to 5.5%, the lowest level since May 2008. Stronger job gains raise future inflationary pressures, which is not good for mortgage rates. The reaction might have been even larger, but wage growth was lower than expected.
For most of last year, investors speculated that the European Central Bank (ECB) would implement a sovereign bond purchase program, similar to the US quantitative easing (QE) program. In anticipation of this added demand for bonds, yields around the world declined. In January, the ECB formally announced that it would purchase 60 billion euros ($66 billion) per month of public and private bonds beginning in March. On the news, global bond yields fell even further. Thursday, the ECB announced that the exact start date will be March 9. Much like the experience in the US, most of the effect on interest rates from QE took place well in advance of the actual start of the program, and little reaction is expected when the bond purchases begin on Monday.
Week Ahead
The most significant economic report next week will be Retail Sales on Thursday. Retail Sales account for about 70% of economic activity. The JOLTS report, measuring job openings and labor turnover rates, will come out on Tuesday. The Producer Price Index (PPI), which focuses on the increase in prices of "intermediate" goods and services used by companies to produce finished products, will come out on Friday. Import Prices and Consumer Sentiment will round out a light week for economic data. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday.
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Average 30 yr fixed rate: |
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Last week: |
-0.07 |
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This week: |
+0.15 |
Please feel free to contact me with any questions you might have. I look forward to working with you and your clients. Please remember, I am licensed in Virginia, North Carolina and Florida.
Jennifer Keenan, Sr Mortgage Consultant, NMLS# 101837
Tidewater Home Funding, 757-272-4199