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

Events Last Week:

Factory Orders Fell
Trade Deficit Rose
Jobless Claims Down
Manufacturing Up

Events This Week:

Tue 9/10
3-yr Auction

Wed 9/11
10-yr Auction

Thur 9/12
Import Prices
30-yr Auction

Fri 9/13
PPI

Retail Sales

 

 

 

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landhome

Jobs Fall Short

A lack of US military action in Syria caused investors to reverse last week's safety trade, while mixed economic data was roughly neutral. As a result, mortgage rates ended the week higher.

Since Fed officials have tied future policy changes to the performance of the economy, investors have reacted strongly to incoming economic data. Nearly all of the data released ahead of Friday's Employment report was strong. The ISM Manufacturing and ISM Services data rose to multi-year highs. Construction Spending posted solid gains. Jobless Claims remained close to five-year lows. The Fed's Beige Book reported that economic growth remained healthy. In short, all signs pointed to a clear path for the Fed to begin to slow the pace of its bond purchases.

The final, and biggest, piece of the puzzle broke the pattern, however. Friday's highly anticipated Employment report fell short of expectations in nearly every area. This was bad news for the economy, but it was favorable for mortgage rates. Against a consensus forecast of 175K, the economy added 169K jobs in August, but the figures from prior months were revised lower by 74K. The Unemployment Rate unexpectedly declined from 7.4% to 7.3%, the lowest level since December 2008. Digging deeper, though, the details revealed that the decline was entirely due to people dropping out of the labor force rather than job gains. The labor force participation rate (the percentage of people able to work who are working or are looking for work) dropped to the lowest level since 1978. The Employment report caused investors to question whether the Fed will begin to taper its bond purchase program at its next meeting.

Also Notable:
  • ISM Services increased to the highest level since Dec. 2005
  • ISM Manufacturing rose to the highest level since June 2011
  • Auto sales rose to the best level since Nov. 2007
  • The European Central Bank made no change in rates

graph

 
Average 30 yr fixed rate:
Last week: -0.05%
This week: +0.10%
Stocks (weekly):
Dow: 14,900 +100
NASDAQ: 3,650 +50
 

This Week

The big day will be Friday when Retail Sales, PPI, and Consumer Sentiment will be released. Retail Sales account for about 70% of economic activity. The Producer Price Index (PPI) focuses on the increase in prices of "intermediate" goods used by companies to produce finished products. Import Prices will be released on Thursday. There will be Treasury auctions on Tuesday, Wednesday, and Thursday. The highly anticipated Fed announcement will come out on September 18.

©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. 09-09-13  

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