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Stocks Tumble While New Jobs Surge

01/11/2016

In This Issue

Last Week in Review: Stocks tumble in global economic rumble. Job creation surges! 

Forecast for the Week: The plethora of reports may take a backseat to China

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Last Week in Review

"I feel the sky tumbling down." Carole King. Global stocks fell, and the Dow lost more than 1,000 points from December 29 to January 7 due to struggles in China, the world's second largest economy. Job creation surged at the end of 2015 here at home, causing additional stir in the markets. 

Employers added 292,000 jobs in December, the Labor Department reported Friday. This was well above the 200,000 expected and follows solid jobs creation in October and November. The end of 2015 marked the fifth straight year in which employment grew by 2 million. While month-over-month wage growth from November to December was stagnant at 0.0 percent, year-over-year wage growth was 2.5 percent. The Unemployment Rate remained at 5 percent, a seven-year low. 

The Jobs Report is considered a market mover each month; however, continued news of China's economic struggles was the real game changer last week as global markets fell. When Stocks plunge, Mortgage Backed Securities and other Bonds usually improve. Because home loan rates are directly tied to Bonds, home loan rates can improve in the process. 

The good news for homebuyers and homeowners right now is that rates are currently hovering near all-time lows.In fact, average rates declined this past week and remain below 4%!

If you or someone you know has any questions about home loan options, market conditions or current rates, please don't hesitate to contact me.

 

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Forecast for the Week

The week has no shortage of economic report releases starting Wednesday, but all of them may pale in the shadow of China's struggling economy.

  • The flurry of reports starts Wednesday with the release of the Federal Reserve's Beige Book.
  • Thursday brings weekly Initial Jobless Claims.
  • Friday is full of reports, including Retail SalesConsumer Sentiment IndexEmpire State Index on manufacturing, and wholesale inflation readings in the Producer Price Index.

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. When Bond prices are moving lower, home loan rates are getting worse.

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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

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