The various jobs reports numbers and revisions had a favorable impact on mortgage-backed securities in the week. The home mortgage rate available through Signet Mortgage for conforming, 30-year fixed is riding at 4.750% for the price of an origination. The stock market has taken a beating causing dollars in a flight to quality to go into MBS and Treasury Bonds. The important commercial rate index, 5-year LIBOR Swap rate improved over 11 basis points in the week. And the watch on inflation continues to hold steady. However, in the home mortgage arena, we know that an artificial life-preserver will soon be removed. We are into the last 7 weeks now of Fed purchases of MBS that will end on March 31. Encourage transactions to get to a lock-ready position before that date if you can. Please call if you have any questions.
A quick note on the jobs data from Thursday: First there is reason to take some encouragement from the numbers and the trends - there have been incremental improvements in many of the numbers over the past 5 months. We should not get comfortable however that this is the final number for January. The revisions data increased the jobless number for prior months by nearly 1 million people. Jobs data are gathered in a number of ways. The "Establishment" report calculates jobs lost and created by surveying companies. The unemployment number is a phone survey of households and even though it is over 50,000 households, errors are easily imputed. The 9.7% unemployment number is said to be a little shy of where it will be in February. If you have further interest in seeing the trend charts on employment and a simple analysis, click here. (Care of Bill Watkins' CERF group.) The weekly report attached by clicking here has a good rundown on the jobs reporting methodology also.
The coming week has few, but important economic news releases. Wednesday will be the trade deficit number. Remember that we have two critical deficit numbers that have to be watched - the budget deficit (currently on a $1 Trillion per year trend line for the next 10 years!) and the trade deficit, typically near $50 Billion per month versus China for example. More information on these deficits are available from the slides and audio of the economic forecast presented by EDCO available by clicking here. Other economic data will be initial jobless claims and retail sales data Thursday, along with consumer sentiment numbers on Friday. Make it a great week!
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