Mortgage rates are on the rise once again!
The DOW Jones Industrial
Average started the week at 15,658.
After jumping up and down during the week as of mid-morning on Friday
the average is at 15,690. If you want an
example of a market going nowhere fast, this is it. Thus far the index is net changed 32 points
after almost 4.5 days of trading. Don’t
expect much different next week as the economic data set to be released is
minimal.
Mortgage rates on the other
hand have once again been rising for more than a week. The largest jump taking place today (Friday). The driving factor behind this move is the
better than expected employment report.
Mortgage applications for
purchases and refinances are showing a reaction to the rising interest
rates. The Mortgage Bankers Association
reported that last week applications declined 5% for purchases and 8% for
refinances. Next week if there is no
reversal in the rising interest rate trend the MBA report will likely show more
declines in both areas.
Total payroll jobs in October
jumped up to 204,000, following a revised increase of 163,000 for September. The consensus prior to the release of the
report was for an increase of only 120,000.
This far better than expected report has traders focusing on the idea
that with an improving employment picture, this may prompt the Fed to begin
tapering the stimulus program sooner than later.
Most believe the Fed will not
make a decision on stimulus tapering on the basis of only one monthly
employment report, however the job market is a big factor in the Fed’s decision
making process. Investors are fearful
that if another strong report follows for November the Fed would take action
early 2014 or even as soon as next month.
Investors and traders cannot wait until the Fed makes a move so they are
already starting to change their holdings and bond positions to minimize losses
on their portfolios. Additional data
that bodes well for a strong employment report is that private payrolls gained
212,000 after a 150,000 increase in September. The consensus expected 128,000
in October.
The unemployment rate ticked up .1% to 7.3 percent after dipping to 7.2 percent in September. The forecast was for a 7.3 percent unemployment rate so this part of the report came as no surprise. Once again the irony that exists is that hiring jumped but the unemployment rate also increased. This is simply because fewer people are looking for work.
The other report that also has bond holders spooked about the Fed tapering the stimulus program sooner than later is the GDP report. GDP increased for the 3rd quarter 2.8% which is much higher than analysts were expecting.
The unemployment rate ticked up .1% to 7.3 percent after dipping to 7.2 percent in September. The forecast was for a 7.3 percent unemployment rate so this part of the report came as no surprise. Once again the irony that exists is that hiring jumped but the unemployment rate also increased. This is simply because fewer people are looking for work.
The other report that also has bond holders spooked about the Fed tapering the stimulus program sooner than later is the GDP report. GDP increased for the 3rd quarter 2.8% which is much higher than analysts were expecting.
JJ Mack
916-517-1800 x 300
jj.mack@apmortgage.com
www.apmcroseville.com
