Overview: The major economic data released over the past week was stronger than expected overall. As a result, mortgage rates climbed to their highest levels in about eight months.
The Job Openings and Labor Turnover Survey (JOLTS) report suggested that the labor market may be tightening again. At the end of November, there were 8.1 million job openings, far above the consensus forecast of 7.7 million. A larger number of openings suggests that companies face more pressure to raise wages to hire enough workers, making this negative news for inflation and thus unfavorable for mortgage rates.
Two other significant economic reports released this week by the Institute for Supply Management (ISM) also exceeded their consensus forecasts. The ISM Services Index increased to 54.1, and the ISM Manufacturing Index rose to 49.3, although this was still its ninth straight month under 50. Since readings above 50 indicate an expansion in the sector and below 50 indicate a contraction, these reports once again emphasize that service companies have outperformed manufacturers over the last few years.
The detailed minutes released on Wednesday from the December 18 Federal Reserve meeting confirmed that officials anticipate fewer additional federal funds rate cuts than they did three months earlier. According to the minutes, they are “at or near the point” at which they should “slow the pace of policy easing.” Officials pointed to a variety of factors to support their more hawkish (in favor of tighter monetary policy) stance. Two of the primary reasons included stronger than expected recent inflation readings and uncertainty about the effects of potential changes in trade and immigration policies. Officials also noted that future decisions will be based on the evolving outlook for economic activity and inflation.
Job Openings (millions)
Week Ahead
Jan. 9
Mortgage markets closing early in honor of the passing of former President Jimmy Carter
Jan. 10
Employment Report
Jan. 15
Consumer Price Index (CPI)
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