On Wednesday, the Fed Spoke. The market was expecting a softer Fed statement and was hoping to see the word "patience". The Fed statement included, "The Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate." What also happened was the statement excluded any reference to additional rate hikes. This signals a sharp change where the current rate environment will exist until there is some strong economic data. Then on top of all that good news, the Fed also stated they are okay with the current balance sheet and expects to operate with an "ample supply" of bank reserves.
Mortgage rates are now at levels last seen in early-February of 2018. The stock market, at the same time, has also performed well. This was the largest one-month increase for the Dow since 2015 and largest January gain since 1989.
On Friday, a strong Labor Department jobs report showing 304,000 new jobs last month. This was the largest gain since February 2018 and far exceeded forecast of 165,000 new jobs. Government workers furloughed during the shutdown were included in wage calculations since they are guaranteed back pay. However, the furloughed workers were classified as temporary layoff and drove the unemployment rate up to 4.0% versus the previous month of 3.9%. Wages increased modestly
The Labor Department revised December and November job growth numbers with the three-month average coming in at 241,000. Approximately 100,000 new jobs monthly are needed to keep up with the working-age population. January was the 100th straight month of job gains.
On Thursday, the Commerce Department released new-home sales data for November showing another strong economic indicator. The seasonally adjusted new home sales were 657,000, well exceeded forecasts of 560,000. The new sales numbers were 17% higher than October and was an 8-month high. The report was previously delayed during the government shutdown. November sales were 7.7% lower year-over-year.
At this time rates may be settling into a consolidation trend that could last through March based on economic data being restored after the government shut-down, confirmation that the government stays open, Brexit and trade between U.S. and China.
The Altitude Group
REALTOR® | MCNE
REALTOR® | CNE