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"Whistle while you work." Snow White.... That's something more people have been able to do lately, as the labor market continues to steadily improve. Here's what December's Jobs Report showed... and what it means for home loan rates.

The Labor Department reported that 103,000 jobs were created in December, and private job growth was 113,000. While these numbers were below the recently ramped up expectations, they do show that the trend in the labor market is improving. Also noteworthy are the upward revisions to the prior two months readings, showing 70,000 more jobs created than had been previously reported.

And yet, the real shocker in the report was a significant decline in the unemployment rate to 9.4%, which is the lowest unemployment rate since May of 2009.

So what did we learn from this Jobs Report?
1. While positive news, this Jobs number was still soft enough to support the Fed continuing on their plans for a full dosage of QE2 for the economy... and this won't be good for Bonds and home loan rates, as it carries along some real inflation threat down the road.
2. The recent tax package and lower tax rate extensions have not yet had enough time to be seen or felt in the economy, so those factors should help provide further improvement in the labor market in future months... but also will create inflation - bad news for Bonds and home loan rates.

The bottom line for right now is that the familiar chant "Don't Fight the Fed" continues to ring true. The Fed is intent on creating inflation, lowering the unemployment rate and raising Stock prices...and they have already been somewhat successful. QE2 will likely keep coming until the employment picture improves significantly, and this is all going to be unfriendly for Bonds and home loan rates ahead.

So what should you do if you have been thinking about purchasing or refinancing a home? The good news is that home loan rates are still extremely attractive right now, so call or email me now to get started.

Mortgage Weekly News From: Shane Atwell @ Primary Residential Mortgage.

Mortgage Forecast of the Week

The new year kicks off with a bang, as nearly all of the reports due out this week are rated as having the potential for a high impact on the markets!

•We start off right away Monday morning with the ISM Index. This is the king of all manufacturing indices and is considered the single best snapshot of the factory sector, so it has the potential to move the markets if it doesn't meet expectations that it will come in better than the prior reading.
•Tuesday brings us the first release of FOMC Minutes of the year. Although the Fed has already released its policy statement, the markets will be examining the minutes closely for indications of the Fed's thinking regarding important topics like inflation, rates, and the overall economy.
•We'll also see some important employment news this week. First up is the ADP National Employment Report on Wednesday, which measures non-farm private employment. The report is expected to show fewer jobs created in December than the previous reading of 93,000 jobs created in November.
•The ADP Report will be followed the next day with another round of Initial Jobless Claims on Thursday. In last week's report, Initial Jobless Claims was reported at the lowest level since July 2008. That was good news for the labor market, but we still need to see if this report was skewed by the holidays or if it was the start of a trend lower in new unemployment claims.
•The big news of the week will be the release of the all-important Jobs Report this Friday. The Average Work Week and Unemployment Rate are expected to hold steady, while Hourly Earnings and Non-Farm Payrolls are expected to rise.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.

Published by: Shane Atwell @ Primary Residential Mortgage