Happy New Year!!! As we closed out 2010, “economic optimism” has been the phrase that has carried on to the new year. Although slow, optimism continues to climb in recent months. With this growing optimism, rates have increased slightly, but still remain at record lows. In fact, rates today are nearly 0.375% lower than they were in the beginning of 2010.
To start the new year, US Manufacturing was reported to increase in December to a 7 month high, which fed this optimistic view for 2011. The S&P 500 was up ~1.4% on the day on this news.
The week ahead is pretty busy in terms of economic releases, and the general consensus is for continued improvement. Any news that doesn’t point toward continued growth could cause a reduction in rates. Minutes from the Fed meeting should be released tomorrow, along with Factory orders and Auto Sales. ADP and Challenger will release employment changes on Wed. And finally, Friday brings the biggest piece of economic data, with the Labor Department’s release of monthly employment data. After last week’s jobless claims came in lower than expectations, some analysts expect slightly more jobs created than in earlier predictions. With these types of expectations, if the new jobs number comes in under 100K for December, we’ll see some disappointment in the market, but it may help lower mortgage rates again.