December 4th, 2015 12:59 PM by Jonathan White
Mortgage Market News for the week ending December 04,
President and CEO
Mortgage Broker | NMLS ID: 3443
Blue Door Mortgage, LLC
Newton, MA 02459
During a week
packed with major economic news, the biggest story came from Europe. On
Thursday, the ECB added less stimulus than expected, causing global
bond yields to increase sharply. Weaker than expected manufacturing
data on Tuesday helped offset the increase in mortgage rates, however.
Friday's key labor market data had little net impact. Mortgage rates
ended the week just a little higher.
Central Bank (ECB) announced additional stimulus measures, but the
package was smaller than investors had expected. The ECB cut rates and
will extend its bond purchase program by six months, but the quantity
of monthly purchases will remain at $60 billion euros. Investors were
looking for a large expansion of this figure. The smaller than
expected package means less added demand for bonds, and bond yields
around the world, including U.S. mortgage-backed securities, moved
higher on the news. This caused mortgage rates to move higher.
and most other countries are adding stimulus, the Fed is beginning a
cycle to tighten monetary policy. This has raised the value of the U.S.
dollar, which increases the cost of U.S. goods for foreign consumers
and hurts the U.S. manufacturing sector. This was seen on Tuesday as
the ISM national manufacturing index unexpectedly dropped to the lowest
level since 2009. Slower economic growth is positive for
mortgage rates, because it reduces inflationary pressure, and this
report caused rates to move lower.
important BLS employment report was a little stronger than expected.
Against a consensus forecast of 190K, the economy added 211K jobs in
November. Upward revisions to prior months added another 35K. The
Unemployment Rate remained at 5.0%. Average hourly earnings, a proxy
for wage growth, were 2.3% higher than a year ago.
caused some volatility, but it had little net effect on
mortgage rates. The solid labor market data made investors nearly
certain that the Fed will hike rates at the next meeting on December
the second biggest report of the month, Retail Sales, will be released
on Friday. Retail sales account for about 70% of economic activity.
Before that, the JOLTS report will be released on Tuesday. JOLTS
measures job openings and labor turnover rates, and this report is
closely watched by Fed officials. In addition, there will be Treasury
auctions on Tuesday, Wednesday, and Thursday.
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