Mortgage rates hit 9-month high, and loan demand drops further
The average rate on the 30-year fixed mortgage hit 3.33% last week and is now about half a percentage point higher than a year ago. Applications to refinance a home loan fell 2% last week compared with two weeks ago and were 40% lower year over year. Applications for mortgages to purchase homes fell 4% from two weeks earlier and were 12% lower year over year
10-Year Treasury Yield
The benchmark 10-year Treasury note yield traded along the flatline Wednesday, with minutes from the Federal Reserve’s December policy meeting due out later in the day. The 10-year hovered around 1.65%. The 30-year bond yield dipped slightly to trade at 2.062%. The 2-year rate, meanwhile, ticked higher by 1 basis point to around 0.78%. Yields move inversely to prices and 1 basis point equals 0.01%. Yields rose at their fastest new year pace in 20 years to start 2022. The 10-year yield hit 1.71% on Tuesday, having ended 2021 at 1.51% on Friday afternoon.
MBA Purchase Applications
MBA's office will be closed Friday, December 24, 2021, and will reopen on Monday, January 3, 2022. Due to the holiday, the results for the weeks ending December 24, 2021, and December 31, 2021, will be released on January 5, 2022.
Mortgage applications decreased 2.7 percent from two weeks earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending December 31, 2021. The results include adjustments to account for the holidays. The Market Composite Index, a measure of mortgage loan application volume, decreased 2.7 percent on a seasonally adjusted basis from two weeks earlier. On an unadjusted basis, the Index decreased 32 percent compared with the two weeks ago. The holiday adjusted Refinance Index decreased 2 percent from the two weeks ago and was 40 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 4 percent from two weeks earlier. The unadjusted Purchase Index decreased 32 percent compared with the two weeks ago and was 12 percent lower than the same week one year ago.
ADP Employment Report
Private job growth totals 807,000 in December, more than doubling expectations, ADP says. Private job growth totaled 807,000 for the month, well ahead of the Dow Jones estimate for 375,000 and the November gain of 505,000 according to ADP. Hiring was broad-based, though leisure and hospitality led with 246,000 new positions. Businesses with 500 or more employees accounted for the bulk of the gains in December, adding 389,000 jobs.
Construction Spending
U.S. construction spending increased in November amid strong gains in single-family homebuilding, but outlays on public projects were weak.The Commerce Department said on Monday that construction spending rose 0.4% after a similar advance in October.Economists polled by Reuters had forecast construction spending climbing 0.6%. Construction spending increased 9.3% on a year-on-year basis in November.
Factory orders
New orders for U.S.-manufactured goods accelerated in November, but business spending on equipment likely struggled to rebound in the fourth quarter.The Commerce Department said on Thursday that factory orders rose 1.6% in November. Data for October was revised higher to show orders rising 1.2% instead of 1.0% as previously reported.Economists polled by Reuters had forecast factory orders advancing 1.5%. Orders increased 12.9% on a year-on-year basis.Manufacturing, which accounts for 11.9% of the economy, is being supported by businesses replenishing depleted inventories.
ISM Services - Non Manufacturing Index
Services PMI at 62%; December 2021 Services ISM Report On Business. In December, the Services PMI® registered 62 percent, 7.1 percentage points below November's all-time high reading of 69.1 percent. The Business Activity Index registered 67.6 percent, a decrease of 7 percentage points compared to the reading of 74.6 percent in November, and the New Orders Index registered 61.5 percent, 8.2 percentage points lower than the all-time high reading of 69.7 percent reported in November.
Initial state jobless claims
Applications for U.S. unemployment benefits rose slightly last week to 207,000 and clung near a 52-year low, suggesting that soaring coronavirus cases tied to omicron haven’t caused mass layoffs.Initial jobless claims increased from a revised 200,000 in the prior week, the Labor Department said Thursday. Economists polled by The Wall Street Journal had forecast initial jobless claims to total a seasonally adjusted 195,000 in the seven days ended Jan. 1. There’s no doubt the number of people applying for jobless benefits are extremely low. The reported number of layoffs are the lowest on record — excluding the first few months of the pandemic — as businesses cope with the worst labor shortage in decades.
JOLTS
The number of job openings decreased to 10.6 million on the last business day of November, the U.S. On the last business day of November 2021, the number and rate of job openings decreased to 10.6 million (-529,000) and 6.6 percent, respectively.
A record 4.5 million workers quit their jobs in November 2021. Workers quit their jobs in record numbers in November while the total employment openings pulled back a bit, the Labor Department reported Tuesday. The so-called quits level surged to 4.53 million for the month, according to the department’s Job Openings and Labor Turnover Survey. That represented an 8.9% increase from October and broke September’s high-water mark of 4.36 million. As a percentage of the workforce, the quits rate of 3% matched September’s mark. In a phenomenon that has been labeled the Great Resignation, workers have been leaving their positions partly in response to increased mobility in the labor market as job openings strongly outnumber those looking for work. For November, the number of job openings totaled 10.56 million, lower than the 11 million estimate from FactSet and a decline from 11.09 million in October 2021. The level, however, was well ahead of the 6.88 million total of those out of work and looking for jobs in November, according to the government’s nonfarm payrolls report for that month. The job openings rate was 6.6%, down from about 7% in October but well ahead of the 4.5% from the prior year.
Mortgage Rates
Mortgage rates started off 2022 with a bang, as the average rate moved higher than at any point last year.The 30-year fixed-rate mortgage averaged 3.22% in the week ending on January 6, up from an average 3.11% last week. A year ago the 30-year rate was 2.65%, the lowest on record."Mortgage rates increased during the first week of 2022 to the highest level since May 2020 and are more than half a percent higher than January 2021," said Sam Khater, Freddie Mac's chief economist. Rates have been expected to rise as the economy improves and inflation looms.
ISM Manufacturing Index
The December 2021 Manufacturing PMI registered 58.7 percent, a decrease of 2.4 percentage points from the November reading of 61.1 percent. This figure indicates expansion in the overall economy for the 19th month in a row after a contraction in April 2020.The Institute for Supply Management’s (ISM) December manufacturing purchasing managers index slid to 58.7% in November from 61.1% in November. A number over 50 means the manufacturing sector is expanding, which it did for the 19th month in a row since April 2020.
PMI Composite Final - Services Dec. 2021
December 2021 PMI Composite final comes in lower from prior month. December 2021U.S. PMI Composite Index (Final): 57.0 vs. 56.9 consensus and 57.2 prior.The data indicated a steep increase in private sector business activity, albeit largely driven by the service sector as manufacturing production rose at a relatively muted pace. New business rose sharply amid a pick-up in service sector client demand. Overall new order growth was the quickest for five months; new export orders, meanwhile, increased for the second month running amid greater client demand at manufacturers and service providers. Service Index: 57.6 vs. 57.5 consensus, 58 prior; this signals a sharp upturn in service sector business activity, despite the pace of growth easing to a 3-month low.
PMI Manufacturing Final - Markit
Final Markit US manufacturing PMI revised slightly lower. Jan 3, 2022 — The final reading of the U.S. manufacturing purchasing managers index from IHS Markit was adjusted slightly downward, to a reading of 57.7 . Final Markit Manufacturing PMI fell to 57.7 in December from 58.3 in November. That was slightly below the flash reading of 57.8. According to IHS Markit, final December Manufacturing PMI for the US was 57.7. That marked a slight downwards revision from the flash estimate of 57.8 and was below October's 57.8 reading.
U.S. Trade Balance / International Trade in Goods and Services
A deficit of $71.6 billion is expected in November for total goods and services trade which would compare with a $67.1 billion deficit in October. The expectation for only a $4.5 billion deepening in the deficit contrasts sharply with advance data on the goods side of November's report which showed a nearly $15 billion widening in the deficit.
November 2021 Trade Gap is $80.2 Billion. The U.S. monthly international trade deficit increased in November 2021 according to the U.S. Bureau of Economic Analysis and the U.S. Census Bureau. The deficit increased from $67.2 billion in October (revised) to $80.2 billion in November, as imports increased more than exports. The previously published October deficit was $67.1 billion. The goods deficit increased $15.1 billion in November to $99.0 billion. The services surplus increased $2.1 billion in November to $18.8 billion...
Employment Situation
The U.S. economy added far fewer jobs than expected in December2021 just as the nation was grappling with a massive surge in Covid cases, the Labor Department said Friday.Nonfarm payrolls grew by 199,000, while the unemployment rate fell to 3.9%, according to Bureau of Labor Statistics data. That compared with the Dow Jones estimate of 422,000 for the payrolls number and 4.1% for the unemployment rate. The unemployment rate was a fresh pandemic-era low and near the 50-year low of 3.5% in February 2020. That decline came even though the labor force participation rate was unchanged at 61.9% amid an ongoing labor shortage in the U.S. The BLS data conflicted strongly with a report earlier in the week from payrolls processing firm ADP, which said private payrolls surged by 807,000. Weekly jobless claims also have been trending near a 52-year low, mostly recently coming in at 207,000 for the week ended Jan. 1.
FOMC Minutes for Meeting 15-Dec-2021
The benchmark 10-year Treasury yield ticked higher Wednesday after the Federal Reserve released a summary of its key December meeting. The 10-year traded at 1.7%, its high of the day, up about 3 basis points. The 2-year rate jumped by 5 basis points to 0.82%. Yields move inversely to prices, and 1 basis point equals 0.01%.
The minutes released Wednesday showed that Fed officials began plans to start reducing the amount of bonds it is holding on its balance sheet. Some officials even said that the balance-sheet reduction could start sometime after the Fed starts raising interest rates.
Consumer Credit Nov 2021
U.S. consumer borrowing surged in November by the most on record, reflecting outsize increases in credit-card balances and non-revolving loans. Total credit jumped $39.9 billion from the prior month after a revised $16 billion gain in October, Federal Reserve figures showed Friday. On an annualized basis, borrowing increased 11%. The November gain exceeded all estimates in a Bloomberg survey which had a median projection of $20 billion.
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