This week, investors
were focused on Friday's monthly Employment report. A high degree of volatility
preceded the report, but the net result of the large daily movements was just a
small increase in mortgage rates for the week.
Against a consensus
forecast of 165K, the economy added 175K jobs in May. There were slight
downward revisions to the figures from prior months. The Unemployment Rate
unexpectedly increased to 7.6% from 7.5%, but this was entirely due to additional
people entering the labor force. As a reminder, the Unemployment Rate measures
the percentage of people who want to work but are unable to find a job. If the
number of jobs holds steady, and more people decide that they want to work, the
Unemployment Rate goes up. In short, there were few surprises in this report.
Given
the influence of labor market data on the Fed's bond buying program, the level
of daily volatility both ahead of the Employment report and following its
release was extremely high. Weaker than expected labor market indicators from
ADP and Jobless Claims caused investors to position for a shortfall in the
Employment report, pushing mortgage rates a little lower ahead of the data.
When the results essentially matched the Wall Street consensus, mortgage rates
gave back the improvement. The middle of the road labor market data provides
little guidance for investors trying to determine when the Fed will begin to
scale back its bond purchases. High levels of volatility are likely to continue
ahead of the next Fed meeting on June 19.
Rob Cunningham
SVP
RMR Financial, LLC |
Princeton Capital | Mortgage California | Landover Mortgage
Telephone (408)
355-2011 | Private Fax (408) 335-2599
No comments:
Post a Comment