Jobs Data Disappoints
Weaker than expected US economic data
and continuing concerns about Europe were positive for mortgage rates,
which declined to record low levels this week.
Nearly
all of the economic data released this week, including GDP, ISM
Manufacturing, Consumer Confidence, and Pending Home Sales, fell short
of expectations. Most significantly, for the third
consecutive month, the important Employment report disappointed
investors. Against a consensus forecast of 150K, the economy added just
69K jobs in May, and the figures for prior months were revised lower by
49K. The Unemployment Rate unexpectedly increased
to 8.2%, from 8.1% in April. In short, the data was weak in nearly
every area. As usual, bad news for the economy was positive for mortgage
rates.
Growing uncertainty in Europe
increased investor demand for safer assets, including US mortgage-backed
securities (MBS). The big question for Greece is still whether it will
exit the euro. In
Spain, the banking sector is on shaky ground, and ECB officials are
opposed to the use of ECB facilities for a bailout. European Union (EU)
officials instead are considering a "banking union" to share the burden
of bank failures in the EU. Reflecting the uncertainty,
borrowing costs in Italy moved significantly higher at its most recent
bond auction. Until investors see definite signs of progress in easing
Europe's troubles, investors are likely to favor relatively less risky
assets.
Stock market news in
the month of May was one of the worst in 10 years. Though May is
notoriously turbulent, the May was rattling both to domestic and
international investors…….We
are all hoping June is much better!
