Job Numbers Released: The Weekly Market Update

Job Numbers Released

Job Numbers Released

The fact that the Federal Reserve Board did not raise interest rates at their last meeting made this week’s release of the job numbers for September very interesting. A weak, or even moderate report would have affirmed the Fed’s position. A very strong report makes the markets think that the Fed should have acted. One must remember that it is not the Fed that causes long-term interest rates to rise, but the market’s reaction to what the Fed is doing. If the markets feel the Fed is not reacting strongly enough regarding inflationary risks, then rates could rise even before the Fed acts.

When the numbers were released showing that 156,000 jobs were created in September, roughly in line with expectations, one might have surmised that this was the best case scenario. The report showed that there is still a significant number of jobs being created, but it was not strong enough to require the Fed to act, especially right before the election. Even the uptick in the unemployment rate from 4.9% to 5.0% was seen as moderate news, because the increase was caused by a rise in labor force participation. This means that more Americans are re-entering the job market.

Now that this report has been released, expect that the markets will be focusing more and more upon the coming Presidential election. Thus far the campaign certainly has provided much entertainment, but with the home stretch upon us, the markets’ focus will be on assessing each candidate with regard to their positions on a wide range of issues that might affect the economy. For example, the consensus from the industry is that neither candidate has made housing issues a focus, despite calls from the housing industry leaders to address several pressing problems within the sector. Eight years ago, housing was front-and-center during the campaign. Another sign of the changing times.

The Weekly Market Update

Rates were stable last week at three-month lows. For the week ending October 6, Freddie Mac announced that 30-year fixed rates remained at 3.42%. The average for 15-year loans also was stable at 2.72%, and the average for five-year adjustables decreased slightly to 2.80%. A year ago, 30-year fixed rates were at 3.76%, approximately one-third of one percent higher than today's levels.

Attributed to Sean Becketti, Chief Economist, Freddie Mac -- "The 10-year Treasury yield leaped to a two-week high following reports of the European Central Bank retreating from its bond-buying program ahead of its initial March deadline. In contrast, the rate on 30-year fixed home loans remained unchanged at 3.42 percent. Over the past two weeks, rates on home loans have remained fairly flat while Treasury yields have fallen and risen. This Friday's jobs report will provide clarity on whether or not rates on home loans will follow the recent upward trend in Treasury yields."

Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.