It's that time of the week: Jobless Claims Thursday. While jobs data is always important, especially in the eyes of the Fed which has their last FOMC meeting of 2015 next week and is analyzing every piece of data to decide whether next week is the right time to start raising the Fed Funds rate, the more important data will come tomorrow and Tuesday with Retail Sales, the Producer Price Index and the CPI on Tuesday (we also get Michigan's Consumer Sentiment Index and Business Inventories tomorrow).
Jobless Claims came in a fair amount higher than expected at 282K vs. 269K expected but the spin is that it's still quite a bit below the 300K threshold that indicates real weakness. Import Prices came in at -.4%, higher than the expected -.8% but still low, which is good for inflation which is a big reason why the Fed might raise rates - the PPI and CPI especially will really get a close look from the Fed. I'm not sure the data is strong enough, at least across the board to warrant an increase in the Fed Funds rate but there me be enough people who actually have a say who do want to raise the rate and will decide to do it if only because the market is expecting it.
The FNMA benchmark bond closed up yesterday by 4 basis points after trading in a tight range for most of the day. It's is down 10 basis points as of this writing but it is 6 basis points off its low. I would remain cautious through the Fed decision. I would lock if you haven't already. If something happens where traders decide to jump in to the market in a big way and push bond prices higher driving rates down, you can float down (if your lender offers that option). Like I said over the last few days, the risk of floating and having rates move against you is much bigger than the reward you might get for what would likely be only minor improvement.
Make it a great day and contact me if I can help in any way: 801-853-8720 or 702-812-1214.
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