The job market in the US was the big news for last week. The Department of Labor reported 132,000 new jobs were created in November, and added another 42,000 jobs via revisions for the past two month's numbers. This was better than analysts were expecting.  Analyst forecasted only about 105,000 new jobs to be added.

 

Overall, this painted a very good economic picture even though the unemployment rate crept up slightly to 4.5% and Hourly Earnings were lower than expected ( Hourly Earnings showed the average US worker earned $16.94 per hour).  Now remember that Bond pricing and home loan rates tend to worsen on positive economic news like a strong jobs number but these two indicators were worse than expected so the worsening to home loan rates was minimal.  Bonds did fall on Friday afternoon, meaning home loan rates did start slightly higher this week.

 

This Week’s Economic Forecast:

We have more high impact economic reports this week being headlined by Tuesday's Fed Meeting, after which they will release their Monetary Decision and Policy Statement.

 

The Fed has said it remains concerned about the core rate of inflation which is "uncomfortably high" at 2.4% year-over-year and "out of their comfort zone", which is in a range of 1 to 2%. The Fed is likely to once again remain in a "paused" mode at this meeting.  I am concerned that if the Fed continues to express concerns about inflation in their Policy Statement, Bonds may move lower and which will cause home loan rates to rise following the statement.

 

Bonds and home loan rates are hurt by inflation or even the hints of inflation since it erodes the buying power of the fixed dollar amount of return that a Bond provides. And speaking of inflation, the Consumer Price Index (CPI) will be released on Friday.  The CPI report has been a market mover over the last few months as inflation takes center stage.  If there is a scent of inflation in the CPI report, inflationary pressure will surly worsen home loan rates. But if inflation appears to ease a bit, home loan rates may improve.

 

Remember, as a general rule, weaker than expected economic data is good for mortgage rates while positive data causes rates to rise.