Mortgage rates are priced slightly worse today.
The first of three significant employment reports was released this morning and the results were solid. Private payroll company, ADP, released its version of the monthly jobs report and it showed that the private sector added 216,000 new jobs last month which is effectively in line with expectations. Tomorrow we’ll get a peek at weekly jobless claims and on Friday the all-important jobs report will be released. The market currently expects about 215,000 new jobs added. Click HERE to understand how the employment report can impact mortgage rates.
In a separate release the Labor Department reported that labor costs rose by a faster pace than expected. This is a positive signal for the jobs market but not good for interest rates because it could trigger inflation in the future.
The Wall Street Journal is reporting that the Federal Open Market Committee, which is set to meet next week, is considering another round of quantitative easing. The newest version is being called a “sterilized” bond-buying program which would apparently not create as much of a long-term inflation threat. In general, quantitative easing is designed to drive down long-term interest rates which is good for mortgage rates so we’ll have to keep an eye on this story.
Greece is getting closer to wrapping up its bond swap program which is a contingency of further bailout funds form the Euro-zone. The deadline for Greek bondholders to agree to the program is tomorrow and at the time of this writing the participation rate is still below the needed level. Should Greece fail to draw enough participation it could push them into a disorderly default which would likely spark a “flight-to-safety” and push mortgage rates lower. However, I believe Greece will hit their target and avoid this scenario…..for now.
Current Outlook: locking bias