This week's mortgage update from Stuart Crawford at V.I.P. Mortgage:
With the end of the government shutdown, investors have
finally turned their attention to the economic reports that are being released
(remember, many reports were not released due to the shutdown, so Wall Street
had no idea as to the current activity of our economy). Most of the data
was mixed/neutral, but the September Employment report was weaker than
expected, which helped mortgage rates ended the week a slightly lower.
Against a consensus forecast of 180K, the economy added only 148K jobs. The Unemployment Rate unexpectedly dropped from 7.3% to 7.2%, the lowest level since November 2008. The decline was mixed news since it was due to both job gains and to people who left the labor force, meaning that they stopped trying to find a job. Bottom line, the results were weaker than what Fed officials would like to see. Between the ongoing uncertainty about future fiscal policy and the slow pace of improvement in the labor market, investors now expect that the Fed will not begin to taper until at least the March Fed meeting (which is a BIG difference from the “scare” we had that this would begin last month!).
While the labor market data disappointed investors, the housing market continued to perform well. September Existing Home Sales were just slightly down from the four-year high reached in August, and they were 11% higher than one year ago. Total inventory of existing homes available for sale was unchanged at a five-month supply. Since the Existing Home Sales data is produced by the National Association of Realtors, it was unaffected by the government shutdown. The New Home Sales report, which is produced by the government, is delayed.
This week will be packed with economic news, as the calendar includes many reports that were delayed by the shutdown. Wednesday will be the biggest day due to the Fed meeting, and investors will be looking for indications that Fed policy will not change any time soon.
Stuart can be reached at 602.710.8975.