Rate Update July 3, 2008

This morning’s jobs report did show continued weakness in the jobs market. The report indicated that the US Economy lost 62,000 jobs last month. This marks the 6th straight month of contraction in the jobs market. As I explained in yesterday’s ‘rate update’, a weak jobs report is likely to help mortgage rates. However, the bond market has shown a muted reaction thus far. Why?

Working against mortgage rates are two other stories:

First, oil prices continue to move higher. Oil futures rose to almost $146 a barrel earlier today which is also raising inflationary concerns.

In addition, the European Central Bank (ECB) announced this morning that they were raising short-term interest rates in order to combat inflation pressures in the EU. This announcement is likely to put pressure on the US dollar in the future which could lead to additional inflation pressure.

Current Outlook: neutral

The views and opinions expressed in this site are those of the author(s) and do not necessarily reflect the official policy or position of Cherry Creek Mortgage Co., Inc. This is for informational purposes only. This is not a commitment to lend.