Rates Improve Slightly Despite July Jobs Report

Mortgage interest rates improved slightly on the week despite today’s stronger than expected employment report for July. July Non-Farm Jobs were up 209k on expectations that they would be up 180k. July Private Jobs were up 205k on expectations that they would be up 175k. The unemployment rate remained at 4.3% as expected and Average Hourly Earnings increased 0.3% as expected. The stronger than expected jobs report makes it more likely that the Fed will begin reducing its balance sheet in September by not reinvesting principal payments. Other data was mixed. Economic data stronger than expected included June NAR Pending Home Sales, the July ISM Manufacturing Index, July ADP Private Jobs, weekly jobless claims, June Factory Orders, and the June U.S. Trade Deficit. Economic data weaker than expected included the July Chicago Purchasing Managers Index, June Personal Income, June Construction Spending, July Auto and Truck Sales, and the July ISM Services Sector Index. The Bank of England kept interest rates low and cut its forecast for growth and wages.

The Dow Jones Industrial Average is currently at 22,042, up over 200 points on the week. The crude oil spot price is currently at $49.23 per barrel, down slightly on the week. The Dollar strengthened versus the Euro and Yen on the week.

Next week look toward Monday’s Consumer Credit, Tuesday’s NFIB Small Business Optimism Index, Wednesday’s Wholesale Trade, Thursday’s Jobless Claims and Producer Price Index (PPI), and Friday’s Consumer Price Index (CPI) as potential market moving events.