From Stuart Crawford at V.I.P. Mortgage Inc:
"A wide range of stronger than expected economic data pressured mortgage rates higher during most of last week. Although, a big surprise announcement from the European Central Bank (ECB) and a shortfall in the U.S. Employment report helped offset the other data, and mortgage rates ended the week just a little higher.
The impressive streak of six months of job gains above 200K ended in August. Against a consensus forecast of 225K, the economy added just 142K jobs in August, the lowest monthly increase since December 2013 (the Unemployment Rate declined from 6.2% to 6.1% as expected). This report appeared to be inconsistent with the strength seen in other recent economic data, causing some economists to expect the August Employment figures to be revised higher. Still, slower growth reduces future inflationary pressures, so the Employment report caused mortgage rates to improve on Friday.
On Thursday, the European Central Bank (ECB) unexpectedly cut rates and announced a highly anticipated new asset purchase program which will begin sooner than expected. The ECB explained that the measures are necessary to help boost economic growth in the region. The added future demand for fixed income assets from the ECB caused global investors to purchase similar assets around the world, including U.S. mortgage-backed securities (MBS).
The economic calendar will be much lighter this week. The biggest economic report will be Friday's release of Retail Sales, which account for roughly 70% of economic activity. Investors will be watching geopolitical events in Ukraine, Iraq, and Gaza as well."
Stuart can be reached at 480.776.2954