Commentary: The Labor Department announced earlier this morning initial claims for government unemployment benefits climbed 6,000 to a seasonally adjusted 401,000 during the ended October 1st. Most credit market participants had expected jobless claims would likely climb by 19,000 this time around. This is the second consecutive week that claims have held steady around the 400,000 mark. While two weeks of improving data does not necessarily mark the beginning of a trend - some economists believe the labor market is starting to show some budding signs of improvement.
This week's initial claims data falls outside the survey period for tomorrow's much more important September nonfarm payroll report scheduled for release at 8:30 a.m. ET.
The consensus estimate is calling for September payrolls to post a gain of 60,000 while the national jobless rate holds at 9.1%. Numbers that match (or closely match) the forecasted values will likely have little impact on the current level of mortgage interest rates. The risk is that we see headline payroll gains of 80,000 or more with a national jobless rate sliding fractionally lower to 9.0%. Numbers like these will almost certainly push mortgage interest rates higher. While such an outcome is certainly possible - its' probability remains very low.
As I mentioned in this week's edition of my newsletter "ViewPoint" the lion's share of the European debt crisis, a slowing domestic economic picture, and the expected impact of the credit market intervention plans of the Fed are already well priced into the mortgage market. From this point forward it will take massive amounts of even more dismal news and events to support steady to fractionally lower mortgage interest rates - but the slightest glimmer of improving economic news will tend to nudge rates higher. Heads up.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
