Commentary:  The mortgage market was body-slammed on Wednesday when private payroll firm ADP announced that their data showed non-government employers added 297,000 jobs in December.  Fear that today's far more important employment report from the Labor Department would be a blockbuster sent shivers through the market place -- causing mortgage investors to push the price of the Fannie Mae 4.0% 30-year mortgage-backed security more than 100 basis points lower.  But that was Wednesday.

This morning the Labor Department released their employment figures which showed the economy created 103,000 more jobs than it lost last month - with the private sector contributing 113,000 new positions - just a little bit less than the 297,000 jobs ADP suggested might appear in today's report.  ADP may soon become an acronym for Always Doubtful Projections.  

The Labor Department also announced this morning that the national jobless rate fell to 9.4% in December from November's 9.8% mark.  Media talking heads breathless told their audiences that the decline in this metric of job market conditions has now reached its lowest level since May 2009.  But that is not the whole story here.  This tidbit of macro-economic news is deceiving this time around.  With today's report, the Labor Department revised figures from its household survey used in calculating the national jobless rate going back for the past five years.  The statistical adjustments involved here have rendered the December decline in the country's jobless rate far less impressive than it initially appeared when the data first hit the news wires.

In a nutshell while today's December nonfarm payroll is collectively a step in the right direction - the economy must create about 125,000 new jobs each moth just to keep up with the natural growth in the working population entering the labor market.  The economy must do substantially better than that on a monthly basis if it hopes to put even a small dent in the roughly 6.5 million workers who how have been unemployed for 27 weeks or more.

Looking ahead to next week Uncle Sam will be in the credit markets from Tuesday through Thursday -- looking to borrow $75 billion in the form of 3- and 10-year notes together with a round of 30-year bonds.  The deluge of supply may put some slight upward pressure on mortgage interest rates.   The government will release the latest read on inflation pressures on Thursday and Friday in the form of the Producer and Consumer Price Indexes.  Investors will get a look at the Retail Sales numbers for December on Friday.  None of the macro-economic data is expected to exert much influence on the trend trajectory of mortgage interest rates.

THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME

Apply Now

Return to Loan Options