Last week’s economic reporting included coverage of Federal Reserve Chair Jerome Powell’s speech to the Economic Club of Washington and the University of Michigan’s data on consumer sentiment. Weekly readings on mortgage rates and jobless claims were also published.
 
Federal Reserve: Chairman Jerome Powell says the “disinflationary process” is ongoing
 
Fed Chair Jerome Powell said in remarks made to the Economic Club of Washington that the “disinflationary process” has started, but he also indicated that January’s unexpectedly strong jobs report indicated that further interest rate hikes are necessary. “We think we need to do further rate increases and we think we’ll need to hold policy at a restrictive level for some time.”
 
Several other senior Fed officials said that further interest rate hikes would be required to keep inflation in check; as 517,000 jobs were added last week after analysts predicted declining job growth as compared to the expected reading of 187,000 jobs added. The national unemployment rate fell to a 54-year low of 3.4 percent. Analysts cautioned that the Fed would likely continue to raise rates to control inflation but Chairman Powell said that the Fed would likely raise rates only “a couple more times.”
 
Mortgage Rates, Jobless Claims Rise
 
Freddie Mac reported higher mortgage rates last week; the average rate for 30-year fixed-rate mortgages was three basis points higher at 6.12 percent. The average rate for 15-year fixed-rate mortgages rose by 11 basis points to 5.25 percent.
 
Jobless claims also rose last week with 196,000 new claims filed as compared to the previous week’s reading of 183,000 initial claims filed. 1.69 million continuing jobless claims were filed as compared to the prior week’s reading of 1.65 million ongoing claims.
 
The University of Michigan reported that its initial consumer sentiment reading for February rose to an index reading of 66.4 as compared to the expected reading of 65.1 and last month’s index reading of 64.9. Consumer sentiment readings over 50 indicate most survey respondents were positive about current economic conditions.
 
The University also released monthly readings on year-over-year inflationary predictions. February’s early reading predicts 4.2 percent year-over-year inflation as compared to January’s reading of 3.9 percent year-over-year inflation.
 
What’s Ahead for the Week of February 13, 2023
 
This week’s scheduled economic reports include readings on home prices, inflation, retail sales, and data on building permits issued and housing starts. Weekly readings on mortgage rates and jobless claims will also be released.

​​Cheers!

Scott Synovic
Fairway Independent Mortgage Corporation
Colorado's Mortgage Expert
www.coloradosmortgageexpert.com
@coloradosmortgageexpert
303-668-3350 Direct

NMLS: 253799 / Fairway Independent Mortgage Corporation NMLS: 2289
Regulated by the Division of Real Estate

The material contained in this newsletter has been prepared by an independent third-party provider. The content is provided for use by real estate, financial
services and other professionals only. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is without errors.

​Stocks and Mortgage Bonds are both lower to start the week after tough central bank talks from the Bank of England and European Central Bank.

Both the ECB and BOE said that the risk of overtightening is dwarfed by the risk of doing too little. These comments come on the heels of the "much stronger" than expected BLS Jobs Report from the US. And this is important, as the US is the engine of the global economy. But their commentary is based on misunderstanding the US Data.

The BLS Jobs Report showed 517,000 job creations in January, blowing out estimates but there were large seasonal adjustments, population controls, and new benchmarks. When removing the population controls, the household survey would not have shown 894,000 job creations, but rather would have only shown 84,000. Additionally, the unemployment rate would not have improved from 3.5% to 3.4%.

But there's more - non-seasonally adjusted data showed 2.5M job losses, but after seasonal adjustments, it was revised to a positive 517,000. The biggest anomaly, perhaps, was that a 471k plunge in the retail sector translated into a +30k seasonally-adjusted run-up, the best number since August - even though retail sales have slid in three of the past four months.

The BLS report was also in stark contrast to other data we are seeing - ADP was only 106,000 job creations in January, the weakest in 2 years, while BLS was the strongest in the last 6 months.

The Week Ahead:
​

• Tuesday: Powell Speech
• Wednesday: Mortgage Apps, 10-year Auction
• Thursday: Initial Jobless Claims, 30-year Auction

​Cheers!

Scott Synovic
Fairway Independent Mortgage Corporation
Colorado's Mortgage Expert
www.coloradosmortgageexpert.com
@coloradosmortgageexpert
303-668-3350 Direct

NMLS: 253799 / Fairway Independent Mortgage Corporation NMLS: 2289
Regulated by the Division of Real Estate

The material contained in this newsletter has been prepared by an independent third-party provider. The content is provided for use by real estate, financial
services and other professionals only. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is without errors.