Guest Post – Tradition Mortgage’s Weekly Update August 8, 2016
Rates Tick Up on Big Job Report
Mortgage rates increased following the release of Friday’s upside surprise in the important monthly Employment report. Against a consensus forecast of 180K, the economy added 255K jobs in July. In addition, upward revisions added 18K jobs to the results for prior months. Stronger job and wage gains are negative for mortgage rates, since they increase the outlook for future inflation.
Rates would have moved even higher, but in a rate friendly move, the Bank of England (BOE) announced a 25 basis point rate cut and a new bond purchase program to stimulate economic activity. Investors had expected the rate cut, but the additional bond purchases were a surprise to some. added demand for bonds from the BOE helped push global bond prices higher and yields lower, including U.S. mortgage rates.
Factors: Second quarter Productivity will be released on Tuesday. The JOLTS report, which measures job openings and labor turnover rates, will come out on Wednesday. The most significant report of the week, Retail Sales, will be released on Friday. Consumer spending accounts for about 70% of economic output in the U.S., and the retail sales data is a key indicator.
Trend: Slightly Upward
This information is intended for professional reference only, and not intended for consumer use. Additional qualifications and disclosures apply.
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