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

Events Last Week:

ISM Services Fell
Jobless Claims Rose
Factory Orders Up
Manufacturing Mixed

Events This Week:

Tues 4/9
3-yr Auction

Wed 4/10
Fed Minutes
10-yr Auction

Thur 4/11
Import Prices
30-yr Auction

Fri 4/12
PPI
Retail Sales

 

 

 

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landhome

Job Gains Fall Short

A wide range of economic news was favorable for mortgage rates last week. The Employment data was weaker than expected, Japan expanded its bond-buying program, and tensions with North Korea increased. As a result, mortgage rates ended the week significantly lower.

Friday's Employment report was disappointing in nearly every area. Against a consensus forecast of 190K, the economy added just 88K jobs in March. Average Hourly Earnings, a proxy for wage growth, was flat from last month. Digging deeper, the small bit of good news was that the data from the prior two months was revised higher by 61K jobs. This was far outweighed, however, by the bad news in the details of the Unemployment Rate. The Unemployment Rate unexpectedly dropped from 7.7% to 7.6%, but the decline was entirely due to people exiting the labor force. It is good for the economy if the Unemployment Rate declines because more people get jobs, but not if the cause is a shrinking labor force. Weak labor market data reduces future inflation expectations, which is good for mortgage rates. In addition, it likely extends the duration of the Fed's bond-buying program, which is also good for mortgage rates.

Thursday, the Bank of Japan announced that it will sharply ramp up its bond purchases to levels which will add $1.4 trillion to its balance sheet over the next two years. Like the Fed, the BOJ is buying bonds to help boost the economy. This added demand for Japanese bonds caused their yields to decline, making US bonds relatively more attractive to global investors. This benefited US mortgage-backed securities (MBS), which helped push mortgage rates lower.

Also Notable:
  • Jobless Claims rose to the highest level since November
  • The European Central Bank (ECB) made no change in rates
  • The value of the Japanese Yen versus the dollar dropped to a 3.5-yr low
  • Gold prices dipped below $1,550 per ounce to the lowest level since May

graph

 
Average 30 yr fixed rate:
Last week: -0.03%
This week: -0.15%
Stocks (weekly):
Dow: 14,450 -100
NASDAQ: 3,180 -50
 

This Week

This week, the detailed Minutes from the March 20 Fed meeting will be released on Wednesday. Import Prices will come out on Thursday. Friday will be the big day with PPI, Retail Sales, and Consumer Sentiment. The Producer Price Index (PPI) focuses on the increase in prices of "intermediate" goods used by companies to produce finished products. Retail Sales account for about 70% of economic activity. In addition, 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. 4-01-13  

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