Daily Commentary by Larry Baer:
U.S.
economic growth tapered off in the first-quarter as business cut back on
spending and inventory building. Strong
demand for automobiles during the quarter prevented the slowdown from becoming
more pronounced. Gross Domestic Product
(an estimate of the value of all the finished goods and services produced
within the country's borders over the course of period of time) expanded at a
2.2% annualized rate - noticeably throttling back from the fourth-quarter pace
of 3.0%. This "guesstimate" of
the economic health of the nation from the Commerce Department will not likely
change the Federal Open Market Committee's position that further financial
stimulus is currently not under consideration.
This report is generally supportive of the prospects for steady to
perhaps fractionally lower mortgage interest rates.
In a separate report, the Labor Department
revealed businesses have been able to ramp up hiring without significant
corresponding gains in payrolls. The
department's quarterly employment cost index rose 0.4% during the first three-months
of 2012, following a revised gain of 0.5% in the prior quarter. The very modest gain in this economic metric
strongly suggest wage pressures are unlikely to stoke inflation anytime soon -
a positive for the prospects of at least steady if not fractionally lower
mortgage interest rates.
Looking ahead to the coming week everything
from Monday's Personal Income and Spending report to Tuesday's Institute
of Supply Management's
Manufacturing index to Thursday's initial weekly jobless claims report will
likely amount to nothing more than a warm-up act for Friday's much anticipated
April Nonfarm Payroll report.
Market participants are currently
anticipating the economy created 175,000 net new jobs in April - a nice
improvement from the 120,000 gain registered in March - but still well below
the 250,000+ pace necessary to just keep up with the number of new entrants
into the workforce. If the actual number
matches or closely approximates the consensus estimate mortgage interest rates
will likely remain fairly steady at current levels. In the off-chance the actual headline number
exceeds 200,000 -- look for surprised mortgage investors to react by pushing
rates aggressively higher.
THE
MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
