After falling for several weeks, stronger than expected economic data
caused mortgage rates to turn a little higher late this week. Upside
surprises in important labor market, housing, and manufacturing reports
were negative for mortgage markets and positive for stocks.

Following Friday morning’s better than expected Employment report,
mortgage rates moved higher. Against a consensus forecast for a decline
of 110K jobs, the economy lost 54K jobs in August. Temporary census
workers accounted for a loss of 114K jobs, and the private sector added
67K jobs. The June and July figures saw significant upward revisions as
well. The Unemployment Rate rose to 9.6% from 9.5%, matching
expectations, as the labor force grew by about 550K workers.

After several months of housing data which has failed to meet
expectations, this week’s data contained relatively good news. Investors
were expecting July Pending Home Sales to remain at June’s record low
levels, but instead they rose 5% from June. Pending sales are a leading
indicator for the housing market, so home sales may pick up a little in
coming months. The chief economist of the National Association of
Realtors (NAR) expects “improved affordability conditions” to boost home
sales, but warned that a housing market recovery will be a “long
process.”

Also Notable:

* The Core PCE inflation index rose at a low 1.4% annual rate
* As expected, the European Central Bank (ECB) made no change in
rates
* The Fed minutes showed that Fed officials were divided at the
Aug 10 meeting
* The Treasury will auction $67 billion in 3-yr, 10-yr, and 30-yr
securities next week

Week Ahead

After a busy week this week, the Economic Calendar will be very light
next week. The Fed’s Beige Book will come out on Wednesday. The Trade
Balance will be released on Thursday. There will be Treasury auctions on
Tuesday, Wednesday, and Thursday. Mortgage markets will be closed on
Monday for Labor Day…that being said, this weekend and Monday I am
available if you need – I invite you to call.

Kevin Martini

THE KEVIN MARTINI GROUP: SUNTRUST MORTGAGE

1130 Situs Court, Suite 190, Raleigh, North Carolina

919.858.0023 - Kevin@KevinMartini.com