MARKET COMMENT
Mortgage bond prices finished the week sharply lower which put upward pressure on rates. Rates were relatively flat Monday and Tuesday but shot up toward the end of the week amid strong data. The ADP payrolls report showed the economy added 230,000 jobs in September. Traders expected the addition of 184,000 jobs. Small firms added 56,000 jobs, medium-sized businesses added 99,000 and large companies added 75,000. Strong jobs data supports additional rate hikes from the Federal Reserve. Factory orders rose 2.3% versus the expected 1.8% increase. Weekly jobless claims printed at 207,000 and continuing claims, a summation of all receiving benefits, at 1,650,000. Claims were expected at 210,000 and continuing claims at 1,610,000. Mortgage interest rates finished the week worse by 7/8 of a discount point.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Producer Price Index | Wednesday, Oct. 10, 8:30 am, et | Up 0.2%, Core up 0.1% | Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates. |
| 3-year Treasury Note Auction | Wednesday, Oct. 10, 1:15 pm, et | None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| 10-year Treasury Note Auction | Wednesday, Oct. 10, 1:15 pm, et | None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Consumer Price Index | Thursday, Oct. 11, 8:30 am, et | Up 0.2%, Core up 0.1% | Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates. |
| Weekly Jobless Claims | Thursday, Oct. 11, 8:30 am, et | 208K | Important. An indication of employment. Higher claims may result in lower rates. |
| 30-year Treasury Bond Auction | Thursday, Oct. 11, 1:15 pm, et | None | Important. Bonds will be auctioned. Strong demand may lead to lower mortgage rates. |
| U of Michigan Consumer Sentiment | Friday, Oct. 12, 10:00 am, et | 101.2 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
TRADE DATA
The much-anticipated Bureau of Labor Statistics (BLS) Employment Situation Report showed the economy added 134K jobs in September and the unemployment rate was 3.7%. Traders were expecting 184K jobs with an unemployment rate of 3.8%. Despite the wide miss on the job creation number traders focused on other aspects of the report. The two previous months were revised higher by a total of 87K and the unemployment rate of 3.7% was last seen in December 1969.
Health care employment rose by 26,000 in September. Hospitals added 12,000 jobs, and employment in ambulatory health care services continued to trend up (+10,000). Over the year, health care employment has increased by 302,000.
Construction employment continued to trend up in September (+23,000). The industry has added 315,000 jobs over the past 12 months.
Employment in manufacturing continued to trend up in September (+18,000), reflecting a gain in durable goods industries. Over the year, manufacturing has added 278,000 jobs, with about four-fifths of the gain in the durable goods component.
Rates have risen over the past few months as the economy reports solid indicators and inflation is expected to push higher. However, rates remain historically favorable. Now is a great time to take advantage of these levels.
