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By G. Steven Bray
Last week’s strong jobs report put a fleeting scare in the mortgage market. Maybe rates should be higher? But then the eggnog kicked in, and rates wandered back down towards their recent lows.
So, what’s going on? A strengthening economy usually means higher rates. Well, as we discussed many times, markets seem to have their focus overseas. Europe appears headed for another recession, China may be headed for the dreaded “hard landing,” and Japan – well, it’s still a basket case. Markets figure overseas weakness can’t help but leak into the domestic economy.
How about the week ahead? While markets mostly ignored the jobs report, they may pay more attention to the retail sales report on Thurs. Sales on Black Fri were surprisingly weak, and consumer spending accounts for roughly 70% of GDP. If the report confirms the weakness, mortgage rates could see new lows for the year. If the report is equivocal, which is more typical, I suspect rates will plod along in their current range until world events give them a reason to move.