The highlight of this past week's economic calendar was the Employment Situation Summary for October.
Nonfarm Payrolls increased by 250,000 and this was higher than the consensus forecast of 190,000.
Average Hourly Earnings increased 0.2% for October as expected, and have increased over the course of the year by 3.1%.
The unemployment rate remained at 3.7%, almost a 50-year low. The strong jobs data suggests the Federal Reserve will remain on their path to tighten monetary policy. While the Federal Reserve’s Federal Open Market Committee (FOMC) will be meeting this week, no rate hike is expected with a probability of only 7.2% for a 25 basis point hike. However, the probability for the next rate hike is currently 79.2% at the Fed’s December 19 FOMC meeting.
Positive economic news such as this jobs report generally results in higher mortgage rates, due to a resulting positive sentiment in regards to risk appetite. As investors sell off bonds and buy riskier investments, the result is an increase in yield for mortgage-backed securities, meaning higher mortgage rates for consumers.
For more information on relationships between mortgage rates and other factors, feel free to contact me directly.