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Events
This Week:
Employment
Higher
Pending
Sales Up
Jobless
Claims Fell
Manufacturing
Mixed
Events
Next Week:
Mon 6/7
Ind. Production
Tues
6/8
3-yr Auction
Wed 6/9
Beige Book
10-yr Auction
Thur 6/10
Trade Balance
30-yr Auction
Fri
6/11
Retail Sales
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Jobs
Report Falls Short
The big
economic news this week was Friday's Employment data, which fell short of
Wall Street forecasts and pushed mortgage rates lower. Investors continued
to watch the situation in Europe, but there were no major market moving
developments. Due to a rally on Friday, mortgage rates ended the week
lower.
The May
Employment report revealed the largest monthly increase in jobs since March
2000, but nearly all of the gains came from the hiring of temporary census
workers. Without the census workers, the data fell short of expectations. A
total of 431K jobs were added in May, below the consensus forecast of 500K.
411K jobs came from census hiring, leaving a net gain of just 20K jobs when
those workers are excluded. The Unemployment Rate dropped to 9.7% from 9.9%
in April, but this was mostly due to people dropping out of the labor
force. Investors had expected stronger results from private sector job
growth, and the stock market fell after the news. Weak labor market figures
generally lead to lower inflation and are favorable for mortgage markets.
The
news from the housing sector was more positive. April Pending Home Sales
rose 6% from March, which was stronger than expected, to the highest level
since October 2009. Pending sales are a leading indicator of future housing
market activity. The April 30 expiration of the homebuyer tax credit likely
pulled some pending sales forward which otherwise might have taken place
later in the year. The benefits, though, of extremely low mortgage rates
and very affordable home prices are in place to promote home buying
activity even without the homebuyer tax credit.
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Also Notable:
- The Construction sector lost 35K jobs in May
- Average Hourly Earnings, a proxy for wage growth,
increased at a 1.9% annual rate
- The Treasury will auction $70 billion in 3-yr,
10-yr, and 30-yr securities next week
- The Fed's Lockhart warned that the Fed may
eventually need to raise rates to fight inflation even if
unemployment remains high
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Average
30 yr fixed rate:
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Last
week:
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+0.15%
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This week:
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-0.10%
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Stocks
(weekly):
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Dow:
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10,000
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-200
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NASDAQ:
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2,250
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-25
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Week
Ahead
Next
week, Industrial Production, an important indicator of economic activity,
will be released on Monday. The Fed's Beige Book will come out on
Wednesday. The Retail Sales report will be released on Friday. Retail Sales
account for about 70% of economic activity. Consumer Sentiment and the
Trade Balance will round out the schedule. There will be Treasury auctions
on Tuesday, Wednesday, and Thursday.
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