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Mortgage Time

Mortgage Market News for the week ended July 07, 2017

Compliments of

Lynn Holbrook

Sr. Mortgage Consultant | MLO NMLS ID: 224374

Pinnacle Capital Mortgage Corp.

NMLS: 1071 | AZ BK 0910184

Direct: 602.697.5242 • Fax: 602.224.3041

lholbrook@pcmloan.com • www.pcmloan.com

3200 E. Camelback Road | Suite 123

Phoenix, AZ 85018

Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act.

 

Focus Remains on Europe

 

The prospect of tighter monetary policy from the European Central Bank (ECB) again was the main influence on U.S. mortgage rates this week. The U.S. economic data caused little reaction. Mortgage rates ended the week higher.

 

Similar to what the U.S. Fed did earlier in the decade, the ECB has been buying massive quantities of government bonds to help push yields lower and stimulate the European economy. This has been good for bonds around the world and has lowered U.S. mortgage rates. Last week, however, ECB President Draghi hinted that they might begin to scale back (taper) their bond purchases sooner than expected. The possibility of reduced demand from the ECB caused bond yields to rise. Then on Wednesday, the ECB released the minutes from the June 8 meeting, and this reinforced investor expectations for tighter monetary policy. Global bond yields rose further, including U.S. mortgage-backed securities, pushing mortgage rates higher.

 

Friday’s release of the key Employment report from the Bureau of Labor Statistics revealed a familiar story. Job gains were impressive, but wage growth was not. Against a consensus forecast of 175,000, the economy added 222,000 jobs in June. In addition, upward revisions added 47,000 jobs to the results for prior months.

 

The economy has added an average of 194,000 jobs over the past three months, compared to a monthly average of 187,000 for all of 2016. The unemployment rate unexpectedly increased from 4.3% to 4.4%, but this was viewed as a sign of strength since it was mostly due to workers entering the labor force. Average hourly earnings, an indicator of wage growth, fell short of expectations and were just 2.5% higher than a year ago. The weakness in wage growth was good for mortgage rates and offset the negative effect of the solid job gains. As a result, there was little net change in mortgage rates after the release of the data.

 

 

Looking ahead, Friday will be the big day next week with Retail Sales and CPI. Consumer spending accounts for about 70% of economic output in the U.S., and the retail sales data is a key indicator. The Consumer Price Index (CPI), a widely followed monthly inflation report, looks at the price change for goods and services which are purchased by consumers. Before that, Fed Chair Yellen will be delivering her semi-annual testimony to Congress on Wednesday. In addition, there will be Treasury auctions on Tuesday,Wednesday, and Thursday.

 

 

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Pinnacle Capital Mortgage Corp
Senior Loan Officer
3200 E Camelback Rd #119
Phoenix, AZ
85018
Direct:602-697-5242
Fax:602-224-3041
Email:lynnh@pcmsouthwest.com