Economic Roundup: Week of December 10, 2012

Friday’s Employment data was stronger than expected. Against a consensus forecast of 90K, the economy added 146K jobs in November. Expected to increase from 7.9% to 8.0%, the Unemployment Rate decreased to 7.7%, the lowest level since December 2008. The decline was mostly due to workers leaving the labor force, however, rather than job gains. Overall, investors feared weaker results, and the news was favorable for stocks but had little effect on mortgage rates.

Once again, investors mostly remained on the sidelines waiting for progress on the fiscal cliff talks and the European debt troubles. Headlines in these areas, along with Friday’s Employment report, caused daily volatility, but mortgage rates ended the week with little change.

The last few weeks in December are traditionally a period marked by larger than usual price movements, due to thin trading volume. Usually the flow of news also winds down toward the end of the year. This year, however, there remain several major events which likely will have a significant impact on mortgage rates over the next few weeks, including a Fed meeting, the fiscal cliff talks, and deadlines on the Greek bailout. While there is no way to know what net effect these events will have on mortgage rates, it is reasonable to expect a high level of volatility.

The big story this week will be Wednesday’s Fed meeting. In particular, investors will be looking to see if the Fed will replace a Treasury bond purchase program which is due to expire at the end of the year. The most significant economic data this week will be the monthly inflation reports. The Producer Price Index (PPI) focuses on the increase in prices of “intermediate” goods used by companies to produce finished products and will come out on Thursday. The Consumer Price Index (CPI), the most closely watched monthly inflation report, will come out on Friday. In addition, Retail Sales will be released on Thursday and Industrial Production on Friday. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday as well.

December 10, 2012 by · Leave a Comment

About James

James A. Williamson is currently the Sr VP of Sales Development for Shelter Lending Services (formerly Fairfield Mortgage). James joined Shelter in 1994 and was the company's top Loan Officer in GA for 20 straight years helping over 2500 families finance their homes. James now oversees an incredible group of Loan Officers in Atlanta while further building Shelter's Atlanta business.

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