Commentary: New claims for government unemployment benefits rose by 11,000 last week to their highest level since June. It was the second straight week in which jobless claims posted an unexpected advance. At the same time, consumer prices rose a surprisingly steep 0.4% in August, with food prices posting their biggest gain since March.
The jobs data ramps up the pressure on Federal Reserve Chairman Ben Bernanke and his Federal Open Market Committee together with members of Congress to develop a strategy for injecting additional job-creating stimulus into the flagging economy.
The August consumer price index figures serve as a reminder to everybody involved that the pace of consumer inflation will almost certainly accelerate in proportion to the amount of monetary and/or fiscal stimulus applied.
This relationship is certainly not lost on mortgage investors. Expect mortgage interest rates to creep progressively higher the more detailed the government becomes as they flesh-out the next economic rescue strategy. I'm not suggesting mortgage rates are poised for a rocket shot to higher levels this afternoon - I'm just saying that it would be wise to bear-in-mind that significant job growth created by massive amounts of government designed fiscal and monetary stimulus programs is not typically the "stuff" that notably lower mortgage interest rates are made of.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
