October jobs report follows nomination of new Fed chair
The U.S. job market grew less than expected in October, adding just 261,000 jobs, while Jerome Powell was officially nominated by the White House to succeed Janet Yellen
The U.S. Bureau of Labor Statistics released its October jobs report on Friday, revealing an increase of 261,000 jobs. The unemployment rate fell to 4.1%, dropping the number of unemployed persons by 281,000 to 6.5 million.
While the jobs figure falls short of the expected target of 313,000, it’s admittedly hard to draw any real conclusions from this data due to the disruption caused by this year’s unprecedented hurricane season. Hourly earnings, also effected by the hurricanes, grew only 2.4% in October, but the underemployment rate or “real unemployment rate” dropped to 7.9%, the lowest since December 2016. Investors appear to be taking the report with a grain of salt, as the interest rate markets are mostly unchanged today.
The jobs report comes a day after President Trump nominated Jerome Powell to succeed Janet Yellen, whose four-year term expires in February, as the next chairman of the Federal Open Market Committee. The nomination appeared to be expected by the markets, as interest rates continued along the path lower. Jerome Powell’s Fed will likely be very similar in character and temperament to Yellen’s Fed, which is good for interest rates.
The strong probability of a December rate hike appears to be fully priced in to the financial markets, with Fed futures pointing to an 88% probability of a hike, unchanged after this week’s developments.
It’s important to note that 30-year mortgage rates aren’t always correlated to the Fed rate; in fact, we’ve seen both going in opposite directions lately. With the average 30-year fixed rate mortgage at 3.94%*, homebuyers can still take advantage of rates that are near historical lows. But prospective homebuyers who are ready to make a move should act quickly, as rates will likely rise before the year’s end.
Jeremy Collett is Guaranteed Rate’s Executive Director of Capital Markets. Market Updates are designed to provide readers with a high-level yet insightful view of how economic news, events and trends affect mortgage rates and the homebuying process.
*FreddieMac.com ( http://www.freddiemac.com/pmms/pmms_archives.html)