Non-Farm Payrolls

“Workin’ 9 to 5, What a way to make a livin’.” (Dolly Parton) This past week showed more and more people working 9 to 5 and home loan rates didn’t like it.

First the ADP Report on Wednesday showed 224,000 private jobs created, well above the 184,000 expected.

Then on Friday, the Bureau of Labor Statistics (BLS) Jobs Report showed 250,000 job creations in October, well above expectations.

Within that report, Hourly Earnings (wages) rose 3.10% year over year — the highest rate since April 2009. The pickup in wages is inflationary and this added to the uptick in bond yields.

Bottom line — good news, like this week’s reading on jobs and wages, are bad news for bonds and home loan rates. However, when you consider the strong economic backdrop coupled with still historically low rates — today is a great time to purchase a home.

The Federal Reserve meeting ends Wednesday with the release of the Fed’s monetary policy statement at 2:00 p.m. ET. There is very little chance of a hike to the short-term Fed Funds Rate, but the Fed’s remarks in the statement could be a market moving event.

In the week ahead, the markets will be looking for answers to the following questions.

  • Will the Fed suggest an aggressive pace of rate hikes ahead?
  • Or will they be a bit more “dovish” and back off from some of the recent aggressive rate hike talk?
  • What is their view on inflation and outlook on economic growth?
  • What is the Fed’s take on wages?
  • The markets will also be dealing with the results from the midterm elections which will take place on Tuesday — this could bring uncertainty, which Bonds typically enjoy.

If you or someone you know has any questions about home loan rates, please give me a call. I’d be happy to help.

Source: Vantage

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