Daily Commentary by Larry Baer: The number of Americans who filed first-time request for government jobless benefits fell a surprising 19,000 to a seasonally adjusted 366,000 during the week ended December 10th. Weekly claims have fallen below 400,000 - a level historically associated with an improving labor market - in five of the past six weeks. While this improving news from the jobs sector is certainly welcome -- mortgage investors are keenly aware that the usefulness of this data in measuring labor market conditions is significantly diminished this time of year due to volatility surrounding Christmas holiday hiring. This report was a non-event with respect to its impact on the trend trajectory of mortgage interest rates.
In a separate report, the Commerce Department released data showing the pace of inflation at the factory gate defied expectations for a November reading of unchanged and instead posted a surprisingly strong month-over-month gain of 0.3%. Thankfully the more important core rate, a value that excludes the volatile food and energy components, posted a far more modest uptick of 0.1%. Even though one month does not make a trend - the upward slant in the November producer price index will probably exert a slight bias in the mind of mortgage investors flavoring steady to perhaps fractionally higher interest rates over the course of the next several days.
The last significant economic report on this week's calendar will come in the form of tomorrow morning's release of the November Consumer Price Index. An upward move for either the headline or core rate of this measure of inflation on Main Street will likely make it very difficult for mortgage interest rates to move much lower from current levels.
In my judgment, the potential for notably lower mortgage rates into the end of the year is fading at an accelerating pace.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
