Challenger report show big jump in August layoffs

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Published Date 9/5/2024

Today's Mortgage Rate Summary

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up.

Rates Currently Trending: Neutral

Mortgage rates are moving sideways today. The MBS market improved by +13 bps yesterday. This was not enough to decrease mortgage rates or fees. The market experienced moderate volatility yesterday.

Today's Rate Forecast: Neutral

Jobs: The amount of announced corporate layoffs tripped in August from 26K in July to 76K in August according to the Challenger Job Cuts report. August ADP Employment Change was much weaker than expected with only 99K job additions versus estimates of 145K. Initial Weekly Jobless Claims were lower (better) than expected, 227K versus estimates of 230K. The four week moving average moved lower to 230K. Continuing Claims were 1.838M versus estimates of 1.870M.

Manufacturing: The Revised 2nd QTR Non Farm Productivity hit 2.5% versus the prior release of 2.3%, this was due to a downward revision in Unit Labor Costs from 0.9% to 0.4%.

Services: The August ISM Non Manufacturing (Services) PMI accounts for 2/3 of our economic engine and will be an important read at 10 am. It is expected to hit 51.1 versus July's pace of 51.4 we will pay close attention to Prices Paid as that component really shot up in the ISM Manufacturing report. The index was reported at 51.5. Prices increased by 0.3 to 57.3.

Today's Potential Rate Volatility: Neutral

This morning markets are holding steady ahead of Friday's jobs data. Volatility has started at moderate levels.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

Source: TBWS

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