Important Jobs Report This Week…What About Rates?

There’s so much to discuss this week, so let’s dive in! First of all, mortgage rates remained rather steady last week as markets awaited the comments and fallout from the Fed’s meeting in Jackson Hole, Wyoming. The comments following the meetings by Fed Chair Jerome Powell revealed that the members are talking about tapering their bond buying program but not now. 

This is important because the amount of bonds that the Fed is buying is helping mortgage rates stay low, so when the Fed decides to change this policy, we are likely to see rates rise. From the sounds of his comments, they will not be considering tapering until October so let the good times roll with rates remaining at beautifully low levels, for now.

What does this mean for you? If you have been sitting on the fence about buying your next home or refinancing, now is the time to get while the getting’s good in terms of low rates. Once the Fed begins tapering, it sounds like it could be quite aggressive, which could cause rates to rise. If you’d like to explore your options, let’s do it now.

As for what I’m watching this week…

There are numerous housing reports due out to give us a look at how the sector is holding up and we end the week with the monthly Jobs Report, the most-watched report we see all month.

Already this week, the pending home sales index came out showing another unexpected cooling, by 1.8 percent, in homes going under contract, likely due to low inventory levels. 

We also saw two reports on home price appreciation. The Case-Shiller Home Price Index has been at record levels and beating expectations month in and month out. June’s call was for a 1.7 percent monthly increase for an 18.0 percent annual rate and the actuals beat that, coming in at 1.8 percent with an 18.6 percent annual appreciation number. Not bad!

Then, of course I’ll be watching the employment reports coming out. First up is the ADP report on private sector job creation. The consensus forecast for the August estimate is 500,000 new jobs created.

On Friday is the main event…the monthly Jobs Report. A rise of 740,000 is the consensus for August new job creation numbers following exceptional monthly gains of 943,000 in July and 938,000 in June. Average hourly earnings are expected to slow to 0.3 percent on the month and 3.9 percent on the year in what would be 1 tenth declines for each.

I’m expecting to see the workforce participation rate rise as the phase-out of pandemic benefits comes to an end and more Americans head back to work. The unemployment rate is also anticipated to improve, moving down to 5.2 percent.

Of course, any surprises in the jobs report could spook markets as there are so many uncertainties happening with covid, hurricane Ida, and of course geo-political upheaval. I’ll be keeping an eye on all of it for you!