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Economic News
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Kenton Becker
Sr. Loan Officer
Office: (206) 423-2552
NMLS #123961 ,
Washington #MLO-123961

Events Last Week:

Construction Rose
Jobless Claims Fell
ISM Services Lower
Manufacturing Mixed

Events This Week:

Tues 7/9
3-yr Auction

Wed 7/10
Fed Minutes
10-yr Auction

Thur 7/11
Import Prices
30-yr Auction

Fri 7/12
PPI
Sentiment

 

 

 

landhome landhome
landhome

Job Gains Exceed Expectations

The big event last week was Friday's Employment report. The labor market data came in stronger than expected, which was great news for the economy, but it caused mortgage rates to end the week higher.

Against a consensus forecast of 160K, the economy added 195K jobs in June, and upward revisions to the figures from prior months added another 70K. The Unemployment Rate remained at 7.6%. Average Hourly Earnings, a proxy for wage growth, showed the strongest growth in about five years. In short, this report exceeded expectations in nearly every area, which was a double blow for mortgage rates. Stronger labor market data increases future inflation expectations and it brings forward the expected timing for the Fed to begin to scale back its bond purchases.

While the primary influence on mortgage rates likely will continue to be expectations for Fed policy, a wide range of global events caught the attention of investors last week. China's central bank unexpectedly tightened monetary policy to try to rein in bank lending. This comes at a time when recent economic data from China has reflected slower economic growth. The strength of the world's second largest economy plays a major role in the performance of many other countries. In addition, the Portuguese government is having difficulty generating support for its austerity program, calling into question the political will to institute reforms in other European countries. Finally, protests and violence in Egypt increased in scale. Uncertainty in China, Europe, and the Middle East adds to the already high levels of volatility seen in mortgage markets recently.

Also Notable:
  • The Trade Deficit rose to the highest level since November
  • The European Central Bank (ECB) made no change in rates
  • Euro zone Unemployment rose to a record level of 12.2%
  • Violence in Egypt caused oil prices to move sharply higher

graph

 
Average 30 yr fixed rate:
Last week: -0.10%
This week: +0.25%
Stocks (weekly):
Dow: 15,000 +100
NASDAQ: 3,450 +50
 

This Week

The Economic Calendar will be very light this week. Investors will be focused on Wednesday's release of the FOMC Minutes from the June 19 Fed meeting. These detailed minutes often offer additional insight into the thinking of Fed officials. The one big economic report next week will be the PPI inflation data on Friday. The Producer Price Index (PPI) focuses on the increase in prices of "intermediate" goods used by companies to produce finished products. Import Prices and Consumer Sentiment will be the only other economic data released next week. There will be Treasury auctions on Tuesday, Wednesday, and Thursday.

©2013 MBSQuoteline

landhome
Equal Housing Opportunity Lender. Rates, Program, Fees, and Guidelines are subject to change without notice. Not a commitment to lend. Land Home only conducts business in states we are approved to. Land Home Financial Services, 22525 SE 64th Place, Suite 220, Issaquah, WA 98027. Washington Consumer Loan License #CL-89331. NMLS ID # 89331. Kenton Becker Licenses: NMLS #123961; Washington #MLO-123961. You are receiving this communication because of an existing and/or past business relationship, or because you have consented to receive communications from Land Home. 07-08-13  

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