Market Commentary 12/3

Friday’s mortgage rates should be approximately .125 of a discount point higher than Thursday’s early pricing, partly due to weakness midday yesterday. The bond market is currently down 2/32 (1.45%). 

Stocks are showing early losses with the Dow down 152 points and the Nasdaq down 251 points. 

The first of today’s two relevant economic reports was November’s Employment report at 8:30 AM ET. It revealed that the unemployment rate fell to 4.2% from 4.6% in October when forecasts were calling for 4.5%. This was the lowest rate since February 2020 and is the bad news in the report.

Favorable news came in the payroll number that showed only 210,000 jobs were added back to the economy last month when over 525,000 were expected. That is a significant miss from expectations and raises concerns about the employment sector going forward. However, there were upward revisions to October and September that added 82,000 more jobs to this year’s count than previously thought. In other words, the headline number of 210,000 is very good news, but the revisions seem to offset it in terms of market reaction.

A clear piece of good news without negative revisions to muddy the water was average hourly earnings that signal wage inflation pressures. Today’s report showed that earnings rose only 0.3% last month when it was predicted to rise 0.4%. Furthermore, year over year readings came in lower than thought. 

The second report of the morning came from the Commerce Department, who announced a 1.0% rise in new orders for durable and non-durable goods. This was much stronger than expected, giving us a sign of manufacturing sector strength. Fortunately, this is not considered to be a highly important report, preventing much of a reaction to the data.

Next week has only one economic report that we really need to be concerned with and it comes Friday. The other reports are not likely to heavily influence the markets. 

We also will have a couple of Treasury auctions that may affect rates during afternoon trading midweek. 

Look for details on all of next week’s activities in Sunday evening’s weekly preview. 

This Market Commentary courtesy of Jasmine Rassekh and Mortgage Capital Partners!

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