Mortgage rates are rising again. Although we are not experiencing large increases in a single day, there is certainly a rising trend. There have not been any major headlines that mainstream news has reported that would explain the increase, however there is some less popular economic data that reinforces the notion that the economy is continuing to improve.
An improving economy leads to an improving stock market which means investors will bail out of bonds into stock therefore driving up bond yields which goes hand in hand with mortgage rates.
The first positive report was the sale of motor vehicles. The latest data shows a very solid 1.9 percent jump in August sales to an annual rate of 16.1 million units which is the best showing of the recovery going back to November 2007. The ISM Manufacturing Index reported very strong growth for a second month as well. The August report came in higher than expected and this follows a very strong July report. Two consistent months of strong manufacturing growth is a great sign for economic recovery. The ISM Index is at the highest point in the last 2.5 years.
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Thursday's ADP report showed a slowing rise for private payroll growth however the number is far from weak. ADP reported a 176,000 private payroll increase for the month of August. July's report was revised down to 198,000 however the numbers, although not earth shattering, continue to indicate an improving labor market. Friday at 8:30AM the closely watched National Employment figures will be released. Analysts are expecting the unemployment rate to remain the same at 7.4%.
First time jobless claims are continue to move lower which is yet another indicator that the labor market is improving. First time claims for the prior week fell 9000 down to 323,000. This level is near the lowest level since the start of the recovery. The 4-week average is at a recovery low, down 3,000 to 328,500 from a revised 331,500 in the prior week.
The threat of the U.S, and other allies getting involved in the civil war in Syria continues to have investors on edge which explains some of the larger than normal market swings over the past week. Overall the stock market has been weak however it doesn't seem to be so weak that investors are bailing out of stocks and jumping into the bond market. Since bond yields have been rising investors are having a tough time deciding where to place their money right now.
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In other non-market shattering news, Apple announced they will have a new product launch next week. It is expected that the Iphone 5S will be released but there is little information on what enhancement the product has over the current model. It is amazing how well Apple can keep things a secret.
Next week is light on economic data however the few reports coming out are:
- Wednesday September 11th -MBA Applications
- Thursday September 12th -First Time Jobless Claims
- Friday September 13th -Retail Sales and Producer Price Index
Have a fabulous Friday & wonderful weekend
As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate information. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at 661-505-4300 .