Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on December 5, 2008

Locking Stance: CAUTIOUSLY FLOATING    Mortgage Bonds: -19bp

Welcome to the Jobs Jamboree!  Well, it is already over, but nevertheless it was even worse than my expectations as far as payrolls go.  Remember that on Wednesday I said expectations were that Non-farm payrolls could be as bad as a 500K?  Well, they were 533K!!  Original expectations, prior to the ADP report, were for a loss of only 335K, so this was a huge miss, though much of the miss was factored into the markets the last couple of days.

What about the rest of this mornings jobs data?  Here is the breakdown of all that was released:

  • Non-farm Payrolls:  -533K (-335K expected)
  • Unemployment Rate:  6.7% (6.8% expected)
  • Average Work Week:  33.5 (33.6 expected)
  • Hourly Earnings:  0.4% (0.2% expected)

As you can see, despite the huge miss in the payrolls, the rest is not as friendly and that may account for why bonds are currently down.  That being said, it is also due to the fact bonds rushed up to hit resistance and have fallen back again.  I suspect that mortgage bonds will make at least one more run for that resistance layer, hopefully breaking through it today.

When you look at the data this morning, it was mixed.  Certainly, the huge miss on the payrolls is beneficial to mortgage rates, but the rest is hinting caution needed for the future.  I still believe the Unemployment Rate will rise further, so this being below expectations is not a major concern.  However, the Hourly Earnings is something we need to keep an eye on as things progress.  Hourly earnings increases are part of the inflation equation, so when the jobs market does improve, it could aid in sending inflation through the roof.

What does it all mean for Florida Mortgage Rates?  I am beginning to sound like a broken record, but there is short term pressures that could still get mortgage rates to tick slightly higher.  However, in the broader picture, mortgage rates remain capable of dropping to, dare I say it, the lows of 2003.  That picture can change at any moment, so I am keeping the caution in my stance.

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