Market Comment
Mortgage bond prices finished the week slightly lower which put upward pressure on rates. Mixed data caused uncertainty. Rates were positive into Tuesday morning and then began a steady selloff into the heavyweight employment report Friday. ISM Index came in at 49.5 versus the expected 49 which was relatively neutral. ADP employment was a stronger than expected 214K. Analysts looked for a 194K increase. Factory orders rose 1.6% versus the expected 2% increase. Weekly jobless claims were 278K. Analysts looked for 271K. Continuing claims came in at 2257K, expected 2258K. Revised Q4 Productivity came in at -2.2% from -3.3%. Unemployment data was mixed (see article below.) Mortgage interest rates finished the week worse by approximately 1/4 of a discount point.
February Employment Report The U.S. Bureau of Labor Statistics reported that total nonfarm payroll employment increased by 242,000 in February, and the unemployment rate was unchanged at 4.9 percent. The rate was in line with estimates however payrolls were sharply higher than the expected 190,000 increase. Average hourly earnings fell 0.1% versus the expected 0.2% increase. Employment gains occurred in health care and social assistance, retail trade, food services and drinking places, and private educational services. Job losses continued in mining. In February, average hourly earnings for all employees on private nonfarm payrolls declined by 3 cents to $25.35, following an increase of 12 cents in January. Average hourly earnings have risen by 2.2 percent over the year. In February, average hourly earnings of private-sector production and nonsupervisory employees were unchanged at $21.32. The change in total nonfarm payroll employment for December was revised from +262,000 to +271,000, and the change for January was revised from +151,000 to +172,000. With these revisions, employment gains in December andJanuary combined were 30,000 more than previously reported. Over the past 3 months, job gains have averaged 228,000 per month. The Fed has a huge challenge with the mixed data. Higher than expected payrolls and an increase in earnings for the year support the case that wage inflation is emerging and additional rate hikes may be needed. Flat wages and lower earnings in February support the counterpoint. Expect mortgage interest rate volatility to continue into the second quarter of this year. Now is a great time to take advantage of historically favorable rates.
Copyright 2016. All Rights Reserved. Mortgage Market Information Services, Inc. www.ratelink.com The information contained herein is believed to be accurate, however no representation or warranties are written or implied. |
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