With a Fed meeting, the selection of the next Fed Chair, details about tax reform, and an Employment report, last week had the potential to be extremely volatile. Other than disappointing wage growth, there were no significant surprises in any of these areas. Mortgage rates finished the week about the same.
As expected, U.S. jobs bounced back in October from September’s hurricane-related losses. The economy added 261,000 jobs in October. Combined with upward revisions of 90,000 jobs to the results for prior months, the total gains were close to the expected levels. The unemployment rate, unexpectedly declined from 4.2% to 4.1%, which was the lowest level since December 2000. Since the drop was due to a large number of people choosing to leave the labor force rather than more people finding jobs, this was not viewed as a sign of strength.
Two Fed-related events provided no surprises and caused little reaction. At Wednesday’s meeting, the Fed held the federal funds rate steady and made no significant change to the language in its statement. The statement noted that “economic activity has been rising at a solid rate despite hurricane-related disruptions.” On Thursday, President Trump selected Jerome Powell as his nominee to serve as Fed Chair beginning in February. Under Powell, it is expected that the Fed would maintain a course for monetary policy similar to the current one.
Following the Presidential election in November, the stock market and mortgage rates rose due to expected policy changes under the Trump administration which would boost economic growth. One big component of that was tax reform. In recent weeks, progress has been made in this area, and mortgage rates have reacted. In general, reforms which appear more stimulative for the economy have been negative for mortgage rates, while less stimulative ones have been positive. On Wednesday, the House released additional details about its tax plan. The details were in line with expectations, and the impact on mortgage rates was minor.
This week will lack any big events or economic reports, so I don’t anticipate much rate movement UNLESS something unexpected were to occur.
Please reach out with any questions in regards to this, and let me know if there is anything we can do for you and your valued clients.
Thank you for your continued support, have a productive week.
SVP, Regional Manager
THE CRAWFORD TEAM
V.I.P. Mortgage, Inc.