Mortgage Weekly Update - Last Week in Review - Mountains out of Molehills
Foster Weeks does a weekly mortgage update.===================================
"MAKING MOUNTAINS OUT OF MOLEHILLS...seems to be the specialty of the Department of Labor, as another monthly Jobs Report arrived with massive revisions to prior month's numbers. The headline number of new jobs created in October came in at 92,000 — but the Report also added 97,000 new jobs to September's number, and another 42,000 to August, making some serious "mountains" out of previously "molehill" Reports.
"Additionally, the Unemployment Rate fell to 4.4%, the lowest rate in over five years, and Average Hourly Earnings spiked higher than expected. Combined with news received earlier in the week on slowing productivity and increasing costs of labor...this all spells a tightening labor market. If employers have to pay higher wages to attract and retain good employees, this can lead to "wage-based inflation", meaning that businesses eventually have to pass these costs on to the consumer in the form of higher prices for their goods and services. This hot Jobs news - laced with the scent of inflation - caused Bonds to take a nose dive on Friday, and home loan rates gave back the .125% they had gained earlier in the week.
"So as controlling inflation is the primary concern of the Fed, this report brings up the question — what does the Fed make of this, and what will they do at their next meeting? Will the Fed remain patient, as they wait for the impact of their string of 17 rate hikes to completely filter through the economy? Or will Fed President Jeffrey "The Dissenter" Lacker have his day in the sun, and see the other Fed members agreeing with his inclination to hike? The next meeting is not until December 12th, so they will have a good amount of reports to chew on before then — including another Jobs Report - but the continuing whiff of inflation in the economy is not going unnoticed"... read on.
- Foster Weeks
posted by SFResidence.com @ 7:25 AM
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