Market Update 2-1-13

Good Morning Everyone-

Today is Jobs Friday. Job's Friday is the first Friday of every month. On this day they will release the Non-Farm Payrolls number and the Unemployment Rate. Expectations are that we will have had 180K in jobs created and an unemployment rate of 7.7%. The actual numbers were 157K jobs created. The unemployment rate came in at 7.9%. Interest Rates will be better today. The prior Job numbers in November and December were revised higher. As we know, In November and December, we had a lot of seasonal hiring that happened for the holidays. So we are shedding those jobs right now. Also, last month we had 9K in government jobs loss. We can argue that this is a good thing as those jobs are based on tax revenue and they typically garner costly pension's that tax payers have to pay for.
On Wednesday we also had the first reading of Quarter 4 GDP. Estimates were that we had 1.0% growth but the actual came in at -.1%. Then we had the GDP Chain Deflator, which is inflation within GDP. Estimates were 1.6% and the actual reading came in at .6%. Inflation is the nemesis of bonds but has remained tame.

What we can derive from this week and these numbers, is the economy is sluggish. With the recent run up in stocks and equities that we have seen in the past week has caused our rates to have increased almost .250%. I believe this will be short lived. With the economic data that we have received, this proves that the situation in our country is just average. In order to truly grow, we need job growth around 250K to 300K. With that growth we will start chipping away at the unemployment rate.
Remember the rule of thumb, if stocks do well, interest rates will increase, if stocks do poorly, interest rates will decrease.

So were do we see our mortgage market moving? I think we will be at this level for a few more months. I think the days of having 30 year fixes at 3.25% are gone. We are still slowly improving and this year will most likely be the year of the investor. We will see many people moving more of their money into the market because the current portfolio they have is way  too bond heavy. So basically with less money moving into bonds, it will be harder and harder for the FED's to keep the rates as low as they are/were. The lousy economic data will help keep it there but I think the trend over time, will be rates will move slightly higher.
Rates are still good though and they will remain at these levels for sometime. Remember, with one policy change from our government or one major announcement, it can erode or boost our market in a moments notice.

Be aware of your market, educate your clients and let's close some deals.
Josh