Friday a Big Day for Mortgage Rates
The market has been a mix of emotions over the past week, with quite a bit of rate fluctuation. China raising rates to combat inflation and ADP reporting some strong employment indications in the U.S. both contributed toward rate increases last week. European debt concerns along with indications that U.S. service industries expanded at a slower pace in June helped drive rates lower.
Last Friday was the big day for mortgage rates. Employment data was reported at very discouraging levels, with employers only adding 18,000 jobs compared to an expectation of 105,000. The worst report seen in 9 months, the unemployment rate unexpectedly rose to 9.2%. This seemed to pop the balloon of positive economic momentum seen over the prior weeks, bringing mortgage rates down nearly 0.375% in just one day as investors fled back to the safe haven of Treasury bonds.
To start the week, interest rates are down yet again as concerns continue that the European debt crises will spread to countries like Spain and Italy. This move has brought the 10 year Treasury yield back down below the 3.00% market, fueling us toward the strong interest rate environment we saw a couple weeks ago in the height of the Greek debt crisis.
Beyond Europe, news points to look out for the rest of the week include minutes from the most recent Federal Reserve meeting, along with consumer and producer price indicators which should provide insight in terms of any inflation. Weekly unemployment claims will also be relatively important this week in terms of whether they reinforce poor monthly employment report we received last week. If we see reinforced data suggesting fizzling economic growth, then this current low interest rate environment will be reinforced.