You are here

October Jobs Report Rebounds

11/09/2015

In This Issue...

Last Week in Review: The labor sector rebounded in October, while home prices continue to rise. 

Forecast for the Week: In a light calendar week, will the Fed give any inkling about a December hike to its benchmark Fed Funds Rate?

_____________________________________________________________________________________________

Last Week in Review

"Everybody's working for the weekend." Loverboy. A strong October Jobs Report showed more people working than expected. 

Janet Yellen, in testimony before Congress on Wednesday, said that the FOMC suggested it could be appropriate to adjust rates in December, but also reiterated that the decision will depend on the FOMC assessment of the economic outlook based on data.

The release of the Non-Farm Payrolls report on Friday, which came in much better than expected, is a strong data point that the Fed could use in justifying liftoff at the next meeting. NFP for October surprised at 271,000 jobs created, versus a 185,000 estimate, with a two month net revision of positive 12,000. The unemployment rate dropped to 5.0% from 5.1%, as expected, with wage growth also much better than expected at 0.4% versus a 0.2% estimate. This number supports Yellen’s comments that “the U.S. economy is performing well” and that domestic spending is growing at a solid pace, thus supporting the markets projection that the Fed will now more than likely increase rates in December. Traders saw a 56% chance of a rate increase in December before the jobs report, with that probability jumping to 76% shortly after the number was released.

The Fed Funds Rate is the rate banks use when lending money to each other overnight. When this benchmark rate does increase, it's possible that home loan rates could follow suit, depending on the markets and overall economic conditions. The Fed will continue to monitor this key report for employment trends, as well as other economic data that signal a strengthening economy. 

In housing news, home price gains remain solid, according to CoreLogic, a leading provider of consumer, financial and property information. Home prices, including distressed sales, rose 6.4 percent in September 2015 compared to September 2014. CoreLogic forecasts prices will continue to rise with a projected 4.7 percent gain from September 2015 to September 2016. 

For those in the market for a home now, loan rates, despite being on the rise recently, are still quite attractive. Let me know if I can answer any questions at all for you or your clients about a home purchase or refinance.

_____________________________________________________________________________________________

Forecast for the Week

The economic calendar is light this week. Following the October's Jobs Report, Stock market moves may hinge on any inkling from the Fed that the time has come for a hike to its benchmark rate.

  • Economic data releases start Thursday with weekly Initial Jobless Claims.
  • On Friday, the Producer Price IndexRetail Sales and Consumer Sentiment Index data will be released.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. 

When you see these Bond prices moving higher, it means home loan rates are improving—and when they are moving lower, home loan rates are getting worse.

--

By: Michael Borodinsky

Vice President/Regional Builder Branch Manager | Caliber Home Loans

NMLS #460228

 

 

 

 

 

 

 

Call Michael: 732-382-2654

 

Email Michael: Michael.Borodinsky@caliberhomeloans.com

Follow Michael on Twitter: @mikeborodinsky

 

 

Share

Search

Featured Companies

Twitter Feed