This week, the United States experienced more impressive job gains playing a major role in mortgage markets. While trade news caused some volatility, the labor market data stole the show. As the United States realized stronger than expected job growth, mortgage rates showed an unfavorable reaction. Thus, mortgage rates ended the week a little higher.
More Impressive Job Gains
Against a consensus forecast of 185,000, the economy added more impressive job gains, totaling a massive 266,000 jobs in November. In addition, revisions added 41,000 jobs to the results for prior months. Average job gains over the last three months showed an impressive 205,000.
Healthcare, restaurants, and transportation presented strong hiring numbers. Since faster economic growth raises the outlook for future inflation, this data reflected negatively for mortgage rates.
Unemployment Rate Declines Alongside More Impressive Job Gains
Additionally, the other Employment report components fell in line with the strong job gains. The unemployment rate unexpectedly declined from 3.6% to 3.5%. This matched the 50-year low seen in September.
Also, average hourly earnings jumped 3.1% higher than a year ago, slightly above the consensus. Average hourly earnings indicate wage growth.
Trade Talks Generate Headlines
As the labor market experiences more impressive job gains, the United States-China trade talks generated market moving headlines. However, they left a small net effect. On Tuesday, President Trump caught investors off guard when he said that it might be better to wait until after the 2020 election to make a deal with China.
Later in the week, trade officials emphasized that the negotiations remained in progress. Moreover, the United States mentioned that it’s ready to sign a deal at any time if the terms were favorable.
Looking Ahead After More Impressive Job Gains
After more impressive job gains, investors focus their attention on the central bank meetings. The next United States Fed meeting takes place on Wednesday followed by the European Central Bank (ECB) meeting on Thursday.
For economic data, the Consumer Price Index (CPI) comes on Wednesday, showing the latest price change for goods and services. Later, Retail Sales releases on Friday, highlighting consumer spending growth.
In addition, news about the trade negotiations with China or the impeachment inquiry could have an influence. Trading volume in mortgage markets often is very light during the last couple of weeks of December which can lead to increased volatility.
With more impressive job gains, mortgage rates ended the week slightly higher. Never miss an update with MBSQuoteline. To receive by-the-minute updates on mortgage-backed securities, try our platform free for 14 days.
Stay connected with MBSQuoteline on social media by following us on Facebook, Twitter, and LinkedIn.
All material Copyright © Ress No. 1, LTD (DBA MBSQuoteline) and may not be reproduced without permission. To learn more about the MortgageTime™ newsletter, please contact MBSQuoteline at 800.627.1077 or info@mbsquoteline.com.