Market Update: Rates Fall; Consumer Credit Coming Up This Week

Blog posted On December 05, 2022

Last week was a roller coaster for the stock and bond markets, but mortgage rates came out on top. Rates saw a huge downward shift following Fed Chair Powell’s comments surrounding the fed funds rate outlook. While he was still cautious with his choice of words, the markets took note of his confirmation that the Fed is looking at slowing the pace of rate hikes soon. Experts are thinking that ‘soon’ means the upcoming Federal Open Market Committee (FOMC) meeting next week. Therefore, the markets repriced for the hopeful outlook. But the week didn’t end there.

On Friday, the labor department released its employment situation reports for November. Much to the bond and stock market’s dismay, the reports came in stronger than expected, specifically the data surrounding nonfarm payrolls, wages, and the unemployment rate. Nonfarm payrolls for November came in at 263,000 versus the 200,000 expected. Wages came in at 0.6% versus the 0.3% forecasted. The unemployment rate remained unchanged at 3.7%. Strong jobs data may sound like good news, but it’s not necessarily great for the bond market and consequently interest rates. More on this tomorrow.

This week is the calm before next week’s storm, in terms of important economic reports. The main report we’re covering this week is consumer credit. The consumer credit report tracks total outstanding consumer debt segmented by revolving and nonrevolving credit.  Revolving credit includes monthly debt like credit card statements and nonrevolving credit includes longer term debt like student loans and auto loans but excludes mortgage debt. In September, total consumer credit climbed 6.4% annually – lower than August’s 7.8% gain. Revolving credit climbed 8.7%, which was nearly 10% lower than August’s gain. Nonrevolving credit, however, rose 5.7%, which was roughly 1% higher than August’s levels.

As the markets eagerly await next week’s new reporting, we will keep you up to date on any and all big changes. If you have any questions until then, let us know.

Sources: Mortgage News Daily