Recently, the January Employment Report was released – and this has been the focus for many investors. Another area of interest has been the testimony before Congress of the new Fed Chair Janet Yellen. Both of these events triggered movement in mortgage rates, however the evens seemed to balance each other out – resulting in very little change over the last couple weeks.
The Employment Report fell short of expectations for the second month in a row. This proved to be favorable for the mortgage rates, however this was bad news for the economy. There were questions, however, about the impact of bad weather and the slight reduction in the Unemployment Rate. There were 185K jobs forecasted, however only 113K were added in January. Greater strength was shown in January than other payroll data, according to the survey used to determine the Unemployment Rate. There was a decline from 6.7% to 6.6%, recording the lowest level since October 2008.
Looking at the Net Job Rate over the last months of 2013 into the start of 2014. – we see a yearly high in November at 241, 000 – with a sharp drop in December to 71,000 – however, some recovery was show back up to 113,000 in January. Overall, the trend still seems to be that the economy is getting better, but very slowly.
In the near future, economic growth data will focus for investors, as the uncertainty of the future Fed policy under leadership of Yellen has been clarified. The next major report that will be looked at will be the Retail Sales data. Nearly 70% of the economic activity is Retail Sales. Housing data will also gain in importance over the next weeks. Another factor to watch is the negotiation to raise the debt ceiling. If this does not proceed smoothly, it could spark a reaction in financial markets.
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