Mortgage rates were primarily affected by overseas events in North Korea, the Middle East and China this week as rising tensions and slowing growth caused investors to shift their holdings to safer assets, including U.S. mortgage-backed securities. In result, mortgage rates ended the first week of 2016 lower.
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The December labor market far exceed expectations. Non-farm payrolls jumped 292,000 for the month, which was 92,000 above the consensus. Gains were led by professional and business services, which increased 73,000, the second vast gain in the last three months. The construction sector has also been adding workers due to the experience of unseasonable weather.
The unemployment rate held steady at 5 percent in December. Despite payroll strength, wages came in unchanged and below consensus. The year-over-year rate, though, rose 0.2 percent to 2.5 percent. The December employment report indicates continuing strength in the U.S. economy.
Last week in the economy:
- Mortgage rates (the national average) fell by 0.06% (6 basis points).
- The purchase index of MBA Mortgage Applications dropped drastically during the last two weeks of 2015, down 15 percent. Refinance applications fell 37 percent.
- Initial jobless claims fell in the January 2 week, down 10,000 to 277,000. Though the decrease cut the prior week’s rise in half, the 4-week average is slightly above the month-ago comparison.
- Construction spending for November fell 0.4 percent, far below expectations for a 0.7 percent gain.
- The job market is helping to boost consumer comfort, as the Bloomberg Consumer Comfort Index is up for the fourth straight week to 44.2, the best reading since early October.
What's on the economic calendar for the week of January 4, 2016:
Wednesday: MBA Mortgage Applications
Thursday: Jobless Claims & Bloomberg Consumer Comfort Index
Friday: Retail Sales and Consumer Sentiment
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