Good Afternoon,
Although there are no relevant economic reports released today, the stock market continues its’ rally while the bond market suffers. Since mortgage interest rates are practically driven by the movement of the bond market, rates are rising accordingly. My thoughts are that tomorrow’s quarterly GDP release will be in line or slightly less than the forecasted 2.3% pace, so if you have not locked already, you may want to wait until tomorrow because you lost the chance you had earlier on this week. The question is: why is the stock market rallying today?
Here is what’s going on:
The stock markets reacted to the unexpected number of new payrolls created through the private sector in July. Companies added 9,000 new jobs. New jobs hint to a growing economy, which pushes investors to rally. However, this ADP employment report has been thought to be over-estimated by some analysts and doesn’t necessarily give you a clear picture of the real employment situation. Friday is the day that we will see these figures and all arrows are pointing to a contraction instead an expansion in the over-all employment situation.
Simply Put: Because the private sector of the US economy showed a surprising increase in payrolls, investors continued the stock market rally today. This hurt the bond market and mortgage interest rates increased for the second straight day. If you haven’t locked your loan already, I would wait until tomorrow or even Friday because I do not believe that the “whole” employment situation is as optimistic as we saw in the private sector. However, be ready to pull the trigger through the end of the week because, as we have seen many times before, surprises are almost inevitable in a volatile economy.
Please e-mail me at Savvas@drippinc.com with any questions or to be added to our mailing list.
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