A not too hot, not too cold March Jobs Report sent Stocks higher at the open, but closed lower while Bonds drifted higher throughout the session. Employers added 192K jobs last month, just below the 195K expected, while the Unemployment Rate remained steady at 6.7% with the previous 2 months revised higher by a total of 37K. The 4% coupon rose by 47bp to end at 104.16. As mentioned, Stocks declined – the Dow lost 159.84 points to 16,412.71, the S&P 500 declined by 23.68 points to 1,865.09, while the tech heavy Nasdaq plunged by 110.01 points or 2.6% to end the week at 4.127.72. Oil was last seen at $101.17/barrel up 89 cents.
The current recommendation is to float, not lock into mortgage rates at this time.
Fed Chairman Yellen’s Damage Control
After last weeks sell off in stocks and bonds on the heels of Yellen’s first press conference, the Fed Chairwoman attempted to convince the markets that the Federal Reserve will continue to bolster the U.S. economy, Fed Chair Janet Yellen said on Monday, given the halting pace of the recovery and a still moribund job market.
In some ways, labor conditions are tougher now than in any other recession, Yellen said at a speech in Chicago. She added the Fed’s “extraordinary commitment,” in the form of massive bond-buying and ultra-low interest rates, is “still needed, and will be for some time.” read more
Weekly Survey of Rates from the Mortgage Bankers Association
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) was unchanged at 4.56 percent, with points increasing to 0.31 from 0.29 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 4.46 percent from 4.45 percent, with points remaining constant at 0.27 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for 15-year fixed-rate mortgages was unchanged at 3.62 percent, with points decreasing to 0.23 from 0.24 (including the origination fee) for 80 percent LTV loans.
Commercial Real Estate Lending
Commercial Mortgage backed Securities (CMBS)– The 10 Yr Swap rate moved lower to finish the week at 2.798%, down from last weeks 2.80%.
Housing News
Home prices rose 12.2% from February 2013 to February 2014.
CoreLogic reported that home prices, including distressed sales, rose by 12.2% year-over-year in February, which represents 24 months of consecutive year-over-year increases. From January to February, prices were up 0.8%. Corelogic forecasted that prices could rise by 10.5% year-over-year in March 2014 and 0.5% from February to March. However, despite the rosy gains, prices are still nearly 17% below their peak, which was set in April 2006. The big gains from 2013 are starting to cool and come back down to more normal historical levels.
“As the spring home-buying season kicks off, house price appreciation continues to be strong. Although prices should remain strong in the near term due to a short supply of homes on the market, price increases should moderate over the next year as home equity releases pent-up supply”. Dr. Mark Flemmming, Chief economist for Corelogic
Economic News
March manufacturing activity came in at 53.7. The Institute for Supply Management’s (ISM) had been expected to show a reading of 54.0 versus the prior month’s reading of 53.2. Any reading above 50 indicates growth.
Jobs market bounces back as weather effects wane
Job creation returned to form in March as companies shook off some winter blues, albeit in a manner slightly below Wall Street expectations.
The economy added 192,000 new jobs for the month, while the unemployment rate held steady at 6.7 percent, according to the Bureau of Labor Statistics. The numbers were around consensus and less than indicative of a robust rebound, but still a sign that slowdowns in January and February likely were influenced at least somewhat by inclement conditions.
“It probably means the Fed just stays on steady, but it also means that everybody who said, ‘Oh, we finally turned the corner and we’re going to be booming like crazy,’ they’re going have to hold off for a few months,” former White House economist Austan Goolsbee told CNBC.
The number was slightly below February’s 197,000 gain, which was revised upward by 22,000. January’s total also moved higher in the revised count, from an anemic 129,000 to 144,000. Read more
Orders for U.S. factory goods rose 1.6 percent in February. Economists had expected factory orders to rise by 1.2 percent, reversing the prior month’s 0.7 percent drop.
Sources: CNBC,Bloonberg, Reuters, MMG, Housingwire