Increase In Unemployment Resulting In Lower Rates?
Mortgage news seemed to be on a teeter-totter last week as it was full of ups and downs. While Operation Twist is partially designed to lower longer-term interest rates, it is not yet in full swing as it will be rolled out over the next couple months. Yet, we still found ourselves with slightly lower long-term mortgage rates already last week. In addition, we saw weekly jobless claims fall while the unemployment became a bit stable.
As for ups, we saw the GDP adjust slightly higher last week, along with a 7.7% increase in Existing Home Sales, showing hopes of a growing economy. And across the pond, optimism began to increase as Europe began to create a workable solution for their debt crisis.
As we look at this week, keep your eye on two big reports that are due this week: the ISM Manufacturing Index and the monthly Employment Report. If any economic data continues to point to a slightly improving economy, we could possibly see an upward pressure on rates. If the ISM manages to stay above the 50.0 mark, indicating that manufacturing is expanding, we can expect to see higher interest rates. However, economists are expecting the monthly Employment Report to reveal an increase in unemployment, resulting in a continual downward pressure on rates.