We are counting down the minutes to the 4th of July Holiday – off to the Beach! But before we go, we are making sure everyone who wants to buy a house, and has a property with a contract, is locked in. Rates headed higher today in anticipation of the Jobs Report that comes out on Friday Morning. The jobs reports that have come out so far this year, have shown strength, that prompted Fed Chariman Bernanke to suggest that the Fed might like to see some higher mortgage interest rates. Why is the Jobs report so important?
In Washington, DC, a small brigade of reporters huddle outside the Bureau of Labor Statistics at 8:30am on the first Friday of each month, anxiously waiting for the Non-Farm Payrolls report. CNN and CNBC have live broadcasts of the release of the report each month, as the Stock Market and Bond Market generally make major move on data from “the jobs report.” The Non-Farm Payrolls Report breaks down the hours worked, manufacturing work weeks – and highlights employment changes across 10 private sectors. The US Government treated like the major employer that it is in the report.
One economist explains the significance of the report by saying, “The Non-Farms Payrolls report shows which economic sectors are expanding and which are contracting. Lately, most sectors are expanding.” This is why Fed Chairman Bernanke indicated in early June that with the Economy gaining steam – the QE measures taken by the Fed to “prop up” the Economy might be going away sooner – rather than later. This discussion, caused Mortgage Interest to move significantly higher – in a very short time frame.
“Markets are especially concerned with employment data at the moment as it’s widely held to be the most accurate barometer measuring the Fed’s intent to reduce asset purchases. That potential reduction, or tapering, accounts for most of the major shift in interest rates starting in May. The 800-lb gorilla of employment data arrives on Friday morning in the form of The Employment Situation Report. Most market participants see September as the likely target month in which the Fed will announce tapering. If Friday’s employment data is significant better than expected, it could shift that consensus toward the July meeting (the Fed doesn’t meet in August and thus wouldn’t have a scheduled policy statement in which to announce such a thing).”
Since tomorrow’s a Holiday – we will not have the weekly unemployment numbers that we can add to the previous numbers to get a really accurate forecast… The “whisper” estimate for the Friday Payroll report is that we added 165,000 jobs to the US Economy in June. This is down from the 175,000 jobs added in May. If that is the case, and unemployment stays in the 7.5% range – rates could actually go a little lower. But no one is forecasting that to happen.
So – STAY TUNED! The numbers will come out, and we’ll report on Friday what mortgage rates do.
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