The Labor Department reported earlier this morning 227,000 net new jobs were created last month – enabling the national jobless rate to remain at a three-year low of 8.3%. Not only was February nonfarm payroll figures stronger than most economists had anticipated, the government upwardly revised their nonfarm payrolls figures for both December and January by a collective 61,000 jobs. Although the labor market is starting to see some improvement, the pace of hiring remains too slow to do much to absorb the 23.5 million Americans who are either out of work or underemployed.
The labor picture has likely improved enough that Chairman Bernanke and the other members of the Federal Open Market Committee will choose to delay action on providing additional financial stimulus to the economy in the form of “QE3” mortgage-backed security purchases at their upcoming meeting on Tuesday, March 13th. Most investors have already priced in this assessment into the rate sheets – so the event itself will likely prove anti-climatic with respect to the current trend trajectory of mortgage rates.
Greece averted the immediate threat of an uncontrolled default earlier today, winning strong acceptance from its private creditors for a bond swap deal. Greek finance ministers said creditors had voluntarily tendered 85.8% of outstanding Greek debt and this number would reach 95.7% once legal action was taken on those holdouts subject to Greek law.
A vast majority of global investors remain skeptical all this fancy financial footwork will have any long-term effect. There are grave concerns among market participants that upcoming Greek elections in April or May will result in a new government that may choose to renege on part, or all of the austerity program set out as a pre-condition to the funding of the financial bailout loan the Greeks will likely receive by March 20th. This situation is far from resolved – which by extension means the flow of European capital into the relative safe haven of Treasury debt obligations and mortgage-backed securities will continue for the foreseeable future – a condition sure to be supportive of the prospects for steady to perhaps fractionally lower mortgage interest rates.
Looking ahead to next week Uncle Sam will be in the credit markets from Monday through Wednesday looking to borrow a total of $66 billion in the form of 3- and 10-year notes and 30-year bonds. In terms of economic news investors will be anxiously awaiting the February Retail Sales report on Tuesday to be followed by the inflation twins – Thursday’s Producer Price Index — and Friday’s Consumer Price index. February Retail Sales is currently expected to be pretty strong – posting a headline gain of 1.0% versus January’s 0.4% pace – while the component excluding the more volatile transportation sales is expected to match January’s 0.7% improvement. If the actual numbers match or exceed these consensus estimates – look for mortgage interest rates to creep fractionally higher. Headline values for both the Producer Price and the Consumer Price Index are anticipated to be slightly higher than their January marks – but a lack of pricing power at both the wholesale and retail levels is expected to leave the core rate of inflation at benign levels.
Mortgage Rates as of Friday March 9, 2012 ( purchase transactions )
30 day rate locks, subject to credit score and loan to value edits
FHA
30 year fixed 3.75% 0% origination fee or 3.5% with 1.0% origination fee
Conventional
30 year fixed rate 3.75% ( 30 day lock )
15 year fixed rate 3.125%
5/1 ARM 2.75%
7/1 ARM 3.00%
