The most important data of the quarter was released, signaling the direction for many markets and where economic policy may be headed. Jerome Powell as well as other members of the Federal Reserve spoke about the state of economic policy, informing many parties about their decisions to remain hawkish or dovish in their approach. Further rate hikes could tell a story that inflation is not yet under control and the Federal Reserve feels the need to continue these rate hikes, which will have a significant impact on the lending markets as a whole.
FOMC Rate Decision
While Fed Chair Jerome Powell emphasized uncertainty over whether the Fed has tightened enough to bring down inflation, skeptics still believe policymakers have finished hiking rates. Jerome Powell had several opportunities to make his intentions clear about further rate hikes but had passed on most of them. Analysts largely agree that their recent dovish approach is signaling the end of rate hikes.
- Central bank’s policy rate remains in the 5.25%-5.50% range.
- The Fed says the economy grew at a ‘strong’ pace in the third quarter.
Key point: Two rate decision meetings without a hike may signal a period in which the economy shows the reduction in inflation the FED has been seeking, and relief in interest rates for lending parties.
Primary Mortgage Market Survey Index
- 15-Yr FRM rates seeing a week-to-week increase by 00% with the current rate at 7.03%.
- 30-Yr FRM rates seeing a week-to-week decrease by -0.03% with the current rate at 76%
MND Rate Index
- 30-Yr FHA rates increased week to week seeing a -0.61% decrease for this week. Current rates at 71%
- 30-Yr VA rates increased week to week seeing a -0.63% decrease for this week. Current rates at 70%
Nonfarm Payrolls
Nonfarm Payrolls measure the change in the number of people employed during the previous month, excluding the farming industry.
- Nonfarm payrolls increased by 150,000 for the month, against the consensus forecast for a rise of 170,000. That was a sharp decline from the gain of 297,000 in September.
Job Claims
The weekly jobless claims report from the Labor Department on Thursday showed unemployment rolls rising to a six-month high.
Initial Claims have increased by 217,000 compared to the expected claims of 214,000. The prior week was 211,000.
ISM Manufacturing Data
ISM Manufacturing Data was released this week, much of it impacting many sectors including manufacturing, home building, and commercial building. The Institute for Supply Management’s manufacturing survey rose to 49.0% last month from 47.8% in August. It was the third straight increase, and the index matched a 10-month high.
- Production barometer increased 2.5 points to 52.5% and was positive for the second month in a row.
- The prices index, a measure of inflation, fell 4.6 points to a fairly low 43.8%. Higher oil prices in the future may impact this statistic.
- The index of new orders rose 2.4 points to 49.2%. So far the auto industry strike has had little impact.
What’s Ahead
We’ll have a relatively light week after the FOMC rate decision meetings and manufacturing release, with the only notable economic reports being Consumer Credit and Wholesale Inventories.
NOV
About the Author:
Babak Moghaddam graduated from University of Southern California in 1985. He entered the mortgage industry as a compliance auditor at the Bank of New York in 1986 and completed his masters in Business Administration two years later. After seventeen years in the traditional mortgage banking world Babak finally transformed this vision into his own practice in 2002 when he formed Charter Pacific Lending Corp, a mortgage company that has provided over $900 Million in residential real estate loans throughout Southern California. Babak and his team do things a little differently than other mortgage providers. They work as financial advisors, because they have come to realize that a mortgage is a very powerful financial tool. And just like any other financial tool, it should be managed as part of the overall financial management plan to reach every home owner’s long and short-term financial goals much faster. You can contact Babak for a free consultation and strategy session at (800) 322-1217 X103.