Jobless claims drop again, producer prices up
Posted March 15, 2012
Jobless claims reached a four-year low again this week, dropping by 14,000 to a seasonally adjusted figure of 351,000. This decrease continues the momentum of recent improvements in the labor market, both for claims as well as job creation.
The knee-jerk reaction we saw from the bond market on Tuesday settled down Friday, and Treasuries improved a bit by mid-day trading.
As long as the economic fundamentals continue to improve throughout the spring and summer, it’s going to be difficult for the Fed to put any real emphasis behind another round of stimulus for the markets. If this trend continues, then we may see a gradual, but constant, uptick in mortgage rates over the next few months.
If the economic news is mixed, or if European concerns return to the table, then there’s less of a chance for upward rate pressure and in turn may provide more validation for additional stimulus.
One other sector of economic importance is, of course, inflation. The Producer Price Index Report from Friday indicated that Producer Prices rose to their highest level in five months due to increasing energy costs, but the underlying inflation seems to be under control for now thereby removing concerns about the need for the Fed to raise rates in the short term.
Even with the volatile market movement we’ve had over the past couple of days, there has been no short term negative impact to Triangle housing. In fact, if consumers feel that we’ve reached a bottom on rates, it may provide incentive for those thinking about purchasing or refinancing to act now rather than later, which in turn would help to solidify the traditionally busy spring buying and selling season.