Daily Rate Update: December 2nd-6th

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Friday – December 6, 2019

And the survey says … 266,000 new jobs created in November, crushing expectations of 182,000 as the strong labor market marches on. September and October payroll growth were revised higher by a total of 41,000 lifting the three-month job creation average to a solid 205,000. A 266,000 print along with unemployment and weekly claims at 50-year lows is somewhat astounding and completely lays to rest any talk of a recession for the foreseeable future.

The unemployment rate declined to 3.5%, despite 325,000 people re-entering the labor force and adding to the labor pool. This thanks to a record 164,400,000 Americans working in November. In addition, total unemployed, or the U6 number has fallen to 6.9% from 7.6% in November 2018. The Labor Force Participation Rate was little changed at 63.2% in November. Year-over-year wage growth edged higher to 3.14%, which further fuels consumer spending.

Courtesy of Mortgage Market Guide

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Thursday – December 5, 2019

Mortgage rates were unchanged in the latest survey due in part to mixed signals from various sectors of the economy. Freddie Mac says that data for manufacturing and service industries varied while construction spending fell modestly. The 30-year fixed-rate mortgage is at 3.68% with 0.5 in points and fees. Freddie Mac went on to say that homebuyer demand continued to improve, rising 8% and that homebuyers remain bullish on the real estate market.

On the trade war front, the Chinese Commerce Ministry said today that the two sides are still in talks and believes if a “Phase One” agreement is to be reached, it would have to come with lower tariffs. Lowering tariffs is not a foregone conclusion and the reason why stocks are near unchanged. Despite the mixed trade headlines along with the shenanigans in D.C., the S&P is up 20% year-to-date. This is in response to U.S. economic strength, historically low unemployment and strong U.S. companies easily outpacing their foreign counterparts.

The closely watched government jobs report for November will be released on Friday which includes non-farm payrolls and the unemployment rate. It is expected that U.S. employers hired 182,000 new workers last month, a lofty number. The number is well above the 128,000 workers added in October due in part to the end of the GM strike, where workers get back to work, plus hiring by the Census Bureau may also be factored into the data. The U.S. job market continues to be a bright light for the U.S. economy.

Courtesy of Mortgage Market Guide

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Wednesday – December 4, 2019

Private employment growth slowed in November, reports payroll processor ADP with 67,000 jobs created during the month. The modest gain was well below the 156,000 expected. Small businesses added 11,000 new workers, medium size added 29,000 while large businesses added 27,000. The report comes ahead of Friday’s government jobs report where the past three-month average at a robust 175,000 workers added.

Mortgage rates were unchanged in the latest week and remain at historic lows. The Mortgage Bankers Association (MBA) reports that the 30-year fixed-rate mortgage was unchanged at 3.97% in the week ended November 29 with 0.32 in points. Mortgage application activity declined with the Market Composite Index, a measure of total mortgage application volume, fell 9.2%, the Purchase Index was essentially unchanged while the Refinance Index plunged by 16%. Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting said, “The purchase market overall looks healthy as we enter the home stretch of 2019. The combination of wage gains, slower home-price appreciation, and slightly easing inventory conditions continue to support increased activity.”

Courtesy of Mortgage Market Guide

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Tuesday – December 3, 2019

The housing market continues to be supported by a strong labor market with prices up solidly year over year in October. CoreLogic reports that home prices nationwide, including distressed sales, rose 3.5% year over year in October from October 2018 and up 0.5% month over month from September to October. CoreLogic is forecasting a 5.4% gain from October 2019 to October 2020. A strong labor market will continue to support the housing market here in the U.S. into the spring.

Consumer spending remained strong on Cyber Monday with a record $9.2 billion in online sales, up a whopping 17% from last year. It was the biggest U.S. online shopping day in history. During the peak online shopping hours, there was an astonishing $11 million spent per minute! The data showed that there was $3 billion in sales completed through a smartphone. The consumer continues to buoy the US economy. Top sellers on Cyber Monday included “Frozen 2” toys, L.O.L. Surprise dolls, Nerf products, “Madden 20,” the Nintendo Switch, “Star Wars Jedi: Fallen Order,” Samsung TVs, the Fire TV, Airpods, and air fryers, according to Adobe Analytics data.

U.S. stocks are plunging today after President Trump said last night that a trade deal with China could wait until after the 2020 election. The Dow Jones Industrial Average is down 450 points in Tuesday’s trading session after a 269 point loss on Monday. Adding to the uncertainty in the equity markets is the U.S. imposing new tariffs on French goods in retaliation to a new digital services tax on firms like Google, Amazon and Facebook from France.

Courtesy of Mortgage Market Guide

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Monday – December 2, 2019

Freddie Mac recently reported its forecast on the housing market revealing that a strong labor should continue to buoy the sector into 2020. Freddie Mac is forecasting that mortgage rates will remain low while originations will be robust. The 30-year fixed-rate mortgage is expected at 3.8% in Q4 2019 with 2020 averaging 3.8%. Total originations are expected at $2.101 trillion this year and $2.132 trillion in 2020. The GSE went on to say that with low-interest rates, modest inflation, and a solid labor market, the U.S. housing market continues to show strength. Freddie Mac’s forecast is for the U.S. housing market to maintain momentum over the next two years. Manufacturing activity across the U.S. contracted for the fourth straight month in November due in part to the trade issues between the US and China. The ISM Manufacturing Index fell to 48.1 last month from 48.3 in October. The new orders index slipped, while the employment component also declined. A reading above 50 indicates that the manufacturing economy is generally expanding; below 50 indicates that it is generally contracting. The major stock indexes here in the US have had a banner year due in part to a strong labor market along with solid consumer spending. The Dow Jones Industrial Average is up 20% year-to-date, the S&P is up 25% while the tech-heavy NASDAQ is higher by 30%. With such lofty gains this year, could stock prices move even higher still in December? That depends upon if whether or not a “Phase One” trade deal between the US and China is hammered out by the December 15 deadline. Will there be a Santa Claus rally at year’s end … it remains to be seen. A Santa Claus rally is a calendar effect that involves a rise in stock prices during the last 5 trading days in December and the first 2 trading days in the following January.

Courtesy of Mortgage Market Guide

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