Labor Day & Jobs
Last month we spoke about the data that will be coming out before the Federal Reserve Board meets towards the end of September. These economic reports included jobs, inflation, the quarterly reading on economic growth and more. The August job numbers released just before the Labor Day weekend was expected to be one of the major determinants contributing to the decision by the Fed.
Until now, most analysts were betting that the September Fed announcement would include an October start to the Fed’s previously announced program of paring down mortgage and government bonds. While the markets are dreading such a plan, because it could potentially raise long-term interest rates — the paring down is expected to be gradual. In addition, the Fed is not expected to raise short-term rates in September, but leave open the possibility of such a move before the end of the year.
Did the numbers released strengthen these assessments, or could there be another course for the Fed? The increase in jobs of 156,000 was seen as disappointing, especially when coupled with the downward revision of the numbers for the previous two months. The unemployment rate moved up slightly to 4.4% and wage inflation continued to be tame. The bottom line? Along with the devastating effects of the storm, this further decreases chances for a rate hike this month, but may not deter the Fed from starting to pare down their assets.
The Weekly Market Update
Last week 30-year fixed rates were slightly lower, continuing a trend which started four weeks ago. For the week ending August 17, Freddie Mac announced that 30-year fixed rates fell one tick to 3.89% from 3.90% the week before. The average for 15-year loans decreased to 3.16%, and the average for five-year adjustables moved up slightly to 3.16%. A year ago, 30-year fixed rates averaged 3.43%.
Attributed to Sean Becketti, chief economist, Freddie Mac — “Following a mild decline last week, the 10-year Treasury yield rose 1 basis point this week. The rate on 30-year fixed loans similarly remained relatively flat, falling just 1 basis point to 3.89 percent. Rates on home loans are continuing to hold at low levels amidst ongoing economic uncertainty.”
Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.