September 8, 2009
September 8, 2009 by admin
The stock market is attempting to extend its winning streak to three straight, following the Labor day holiday. Long term fixed mortgage rates are moving higher, as equity investors are shifting dollars out of the bond market, raising the yield on bonds and forcing long term rates to move upward. The stock market is closing in on the anniversary of the beginning of the credit collapse that brought the world economy to a standstill and forced billions of dollars of government subsidizes to help keep the financial markets working.
The stock market today is light on economic news. The market reacted favorably to the August jobs report released last week, which saw the economy lose another 200,000 jobs and the national unemployment rate rise above 9.7%, the highest rate of unemployment in the past twenty years. Investors focused on the continued decline of the job losses, versus the rising unemployment percentage in pushing equities sharply higher to end the week. Today, a report released from Manpower indicated that hiring could be at its lowest level in the last thirty five years. The company surveyed over twenty thousand firms in the United States, and the report demonstrates a low percentage of firms that would be hiring in the fourth quarter of the year. This news could begin to weigh on the market and the economy. Including August figures, there are now close to fifteen million Americans who are unemployed. The larger concern is that while the number of individuals losing their jobs as begun to slow, there appears to be no signal that companies are again hiring. Corporations, appear to be closely following in most consumers’ pattern of a conservative outlook to spending and increased savings to weather the current recession. Many economists believe that the employment market is lagging indicator in the economic picture, and that while the employment numbers are soft, the recession should be over at some point this year. This is a story that is likely to gain attention by investors and consumers alike for the balance of the year.
The mortgage industry will try to wide the wave of refinance and purchase loans through the balance of the year. The market has resisted the normal tendency to push interest rates higher, as investors move out of bonds and into equities. Long term rates are under pressure today on two fronts. The improvement in the job outlook and equity market pushed the yield on the ten year bond up to 3.45% last week, an increase of ten basis points. This move, lifted long term rates by about one eighth of one percent. Today, oil has moved up above seventy dollars per barrel, almost three percent higher. Oil and energy is one of the only areas of the economy that can add inflationary pressure into the market, which tends to push interest rates higher. These two influences have moved to push rates on thirty year fixed loans to five and a quarter percent, with most national mortgage lenders. Fifteen year fixed rate loans, remain well under five percent, offering a great avenue to consumers who have yet to refinance their homes.