Daily Rate Update: October 28th-November 1st

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Friday – November 1, 2019

And the survey says … 128,000 jobs were created in October, nicely above the 80,000 expected. Adding to the positive tone, were strong upward revisions to both August and September, where another 95,000 jobs in total were added. The three-month average for Non-Farm Payrolls is at a strong 176,000, well above the pace needed to sustain the current unemployment rate. And if you factor in the losses from the GM strike and take out the temporary Census workers whom completed their jobs, the October number would have been much higher.

Within the report it showed that average hourly earnings rose 0.2% month-over-month, up 3% year-over-year. The Labor Force Participation Rate edged higher, the Unemployment Rate inched higher to 3.6% from 3.5% while the U6 number, or total unemployed, was unchanged at 7% – and more people entered the labor force. Overall, a strong report as the labor market continues to be a bright spot in the US economy.

Manufacturing across the US picked up in October though it remained in contraction mode for the third straight month. The ISM Manufacturing Index came in at 48.3 this month, just above the 47.8 registered in September. The New Orders Index rose while the Employment Index also saw a solid gain. The manufacturing sector has slowed in the past six months due in part to tariff and trade issues.

Courtesy of Mortgage Market Guide

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Thursday – October 31, 2019

Economic growth in the third quarter of this year increased more than expected due in part to continued strength in consumer spending. The Bureau of Economic Analysis reports that Gross Domestic Product (GDP) rose 1.9%, above the 1.5% expected and near the 2% reported in the second quarter. The consumer spending numbers rose 2.9% annualized while government spending increased 2%. GDP is the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production.

Payroll growth in the private sector increased more than estimated in October while September’s numbers were revised lower. ADP reports that private payrolls rose by 125,000 in October, above the 95,000 anticipated. However, September was revised lower to 93,000 from 135,000, creating a sort of push-pull data. The report comes ahead of the more closely-watched government jobs report that will be released on Friday, also for October.

Mortgage rates continued to inch higher in the latest week, a trend that has been occurring since early September. The Mortgage Bankers Association reports that the 30-year fixed-rate mortgage rose to 4.05% for the week ended October 25, up from 4.02% in the previous week. The Market Composite Index, a measure of total mortgage application volume, rose 0.6%, Purchase Index increased 2%, and the Refinance Index was near unchanged. Mortgage rates remain historically low and should continue to support the housing sector.

Courtesy of Mortgage Market Guide

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Wednesday – October 30, 2019

Economic growth in the third quarter of this year increased more than expected due in part to continued strength in consumer spending. The Bureau of Economic Analysis reports that Gross Domestic Product (GDP) rose 1.9%, above the 1.5% expected and near the 2% reported in the second quarter. The consumer spending numbers rose 2.9% annualized while government spending increased 2%. GDP is the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production.

Payroll growth in the private sector increased more than estimated in October while September’s numbers were revised lower. ADP reports that private payrolls rose by 125,000 in October, above the 95,000 anticipated. However, September was revised lower to 93,000 from 135,000, creating a sort of push-pull data. The report comes ahead of the more closely-watched government jobs report that will be released on Friday, also for October.

Mortgage rates continued to inch higher in the latest week, a trend that has been occurring since early September. The Mortgage Bankers Association reports that the 30-year fixed-rate mortgage rose to 4.05% for the week ended October 25, up from 4.02% in the previous week. The Market Composite Index, a measure of total mortgage application volume, rose 0.6%, Purchase Index increased 2%, and the Refinance Index was near unchanged. Mortgage rates remain historically low and should continue to support the housing sector.

Courtesy of Mortgage Market Guide

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Tuesday – October 29, 2019

The Conference Board reported on Tuesday that its consumer confidence index slipped to 125.9 this month from the September reading of 126.3 and below the 127.5 expected. Concerns over business conditions and job prospects weighed on the index. The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – increased from 170.6 to 172.3. The Expectations Index – based on consumers’ short-term outlook for income, business and labor market conditions – declined from 96.8 last month to 94.9 this month. Lynn Franco, Senior Director of Economic Indicators at The Conference Board said, “Confidence levels remain high and there are no indications that consumers will curtail their holiday spending.”

The National Association of REALTORS® reports that pending home sales rose 1.5% in October, the second straight monthly gain. Year-over-year, sales increased 3.9%. Historically low mortgage rates played a big part in the October gains. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing. Lawrence Yun, NAR’s chief economist said, “Even though home prices are rising faster than income, national buying power has increased by 6% because of better interest rates,” he said. “Furthermore, we’ve seen increased foot traffic as more buyers are evidently eager searching to become homeowners.”

The S&P Case-Shiller 20-City Home Price Index rose 2% year-over-year in August, a sort of backward-looking report given it is almost November. The 2% was below the 2.5% gain expected and matched the July number. The national index rose 3.2% from 3.1% in July. “The U.S. National Home Price NSA Index trend remained intact with a year-over-year price change of 3.2%” said Philip Murphy, Managing Director and Global Head of Index Governance at S&P Dow Jones Indices. “However, a shift in regional leadership may be underway beneath the headline national index.”

Courtesy of Mortgage Market Guide

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Monday – October 28, 2019

The closely-watched S&P 500 opened at a record high (3,032) this morning on the heels of more good news. Positive trade headlines between the US-China and anticipation of a an interest rate cut along with a strong kick off to earnings season are a few reasons for the surge in stocks. Of the 199 S&P 500 companies that have reported earnings so far this season, 78% have exceeded profit expectations. This week is the biggest week for earnings reports. The S&P 500 is up 21% in 2019.

It’s Fed Week! The two-day Federal Open Market Committee meeting kicks off on Capitol Hill on Tuesday and ends Wednesday with the 2:00 p.m. ET release of the monetary policy statement. The Federal Reserve is expected to cut the short-term fed funds rate by 0.25% but what the statement reads and what Fed Chair Powell says at his 2:30 p.m. ET press conference will be key. The fed funds rate is the rate at which depository institutions (banks and credit unions) lend reserve balances to other depository institutions overnight on an uncollateralized basis. The fed funds rate impacts auto and student loans, Helocs, and the prime rate.

Courtesy of Mortgage Market Guide

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