I’d like to think that I’m a pretty optimistic guy; but perhaps a better term would be cautiously optimistic. I believe that things always work out for the best, but that’s doesn’t stop us from going through hard times and heartache. Mortgages (to personify them) are not so hopeful. The mortgage market likes chaos and disorder. The worse the outlook for the economy, the lower the interest rates go. Natural disasters and corporate scandals therefore have a nice big silver lining if you’re working in my industry. When the bad news is flying, lower interest rates swoop in and ease the pain and suffering. People find hope in the prospect of saving some money on their biggest monthly bill and having extra funds for other needs.
The job market has seen some declining health over the last few months, but that ended today with 114K more jobs being created than were expected. Hourly Earnings are up 4.0% from this time last year, and the Unemployment rate dropped a notch to 4.1%. Furthermore, the Dockworker strike that threatened to cripple the supply chain and cause a ripple of disruptions to the labor market has come to an end after only three days. And all it took was a 62% pay increase over the next six years. If that’s not strength in numbers I’ve never seen it.
Strong reassurance that American jobs are secure is eroding the expectation of lower interest rates in the short term, though there’s still a 98.1% likelihood for the Fed to cut rates another 1/4% next month.
