Weekly Economic Update - 4.9.18
I hope you had a nice weekend.
RATE MOVEMENT (from prior week) - UNCHANGED
Investors were focused on Friday's Employment report and the policy on tariffs last week. Despite unexpected results on both fronts, there was little reaction in mortgage rates, and they finished the week nearly unchanged.
IMPORTANT ECONOMIC FACTORS:
Jobs Data - Against a consensus forecast of 175,000, the economy added just 104,000 jobs in March which surprised most investors. In addition, downward revisions subtracted 50,000 jobs from the results for prior months. The unemployment rate was flat at 4.1%. Typically a “miss” like this would trigger rates to move downwards, but markets did not react this way.
President Trump – On Thursday, President Trump threatened to add an additional $100 billion in tariffs on Chinese goods on top of the previously announced $50 billion. Chinese officials quickly said that they would respond with proportional measures. Some people think that both sides are just attempting to gain leverage in trade negotiations and that the tariffs will never be imposed. If these actions result in a trade war, it likely would have multiple effects. One would be reduced global economic activity, which would be good for mortgage rates, as it would reduce the outlook for future inflation. However, tariffs also raise the price of imported goods, which would increase inflationary pressures. These offsetting factors make the overall impact on mortgage rates difficult to predict.
Looking ahead, the minutes from the March 21st Fed meeting will come out on Wednesday. These detailed minutes provide additional insight into the debate between Fed officials about future monetary policy and the “rate hike schedule”. The Consumer Price Index (CPI) also will come out on Wednesday. CPI is a widely followed monthly inflation report that looks at the price change for goods and services, another important piece of data the Fed uses to make rate decisions.
Please let me know if you have any questions in regards to this.
Thank you for your continued support, have a productive week.
SVP, Regional Manager
THE CRAWFORD TEAM