Overseas Issues Push Rates Lower
Several events caused investors around the world to shift their holdings to safer assets. On Monday, Saudi Arabia cut diplomatic ties with Iran, raising tensions between these two major powers in the Middle East. On Wednesday, North Korea announced that it had successfully tested a hydrogen bomb. Weaker than expected economic data in China released this week also was positive for mortgage rates.
U.S. Job Numbers Up Big
Despite troubles abroad, the U.S. job market surged in December. Against a consensus forecast of 200K, the economy added 292K jobs in December. Upward revisions to prior months added another 50K. The U.S. added an average of 284K jobs over the last three months, and 2.65 million jobs were added in 2015.
Surprisingly strong job gains often cause mortgage rates to move higher. However, there was little net change in rates after this report. One reason is that average hourly earnings, an indicator of wage growth, fell short of expectations with a flat reading. The lack of wage inflation was positive news for mortgage rates.
Factors: The JOLTS report, will come out on Tuesday. JOLTS measures job openings and labor turnover rates. Retail Sales and the Producer Price Index (PPI) will be released on Friday. Consumer spending accounts for about 70% of economic output in the U.S., and the retail sales data is a key indicator.
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