Year-End Blockbuster Report ~ January 11, 2019

The December Employment Situation report was a total blockbuster. The Bureau of Labor Statistics reported that 312,000 jobs were created during the month, the strongest showing since February 2017. Analysts had much lower expectations; theEconoday consensus of 180,000 was typical. There were also upward revisions to the previous two months' numbers including an additional 21,000 jobs added to the dismal November estimate of 155,000.

Construction was the big winner with 38,000 new jobs, which we can hope will translate into more new home construction, and wages rose 0.4% from November and 3.2% year over year, the best showing since last December and one of the highest of the recovery.

The unemployment rate ticked up from 3.7 to 3.9%, but this was also good news. It reflected an increase in those looking for work--that number climbed from 6.018 million to 6.294 million--many of whom were discouraged workers now returning to the hunt.

Fannie Mae Chief Economist Doug Duncan said the report "should help soothe fears of a marked slowdown in the economy." However, he also notes that it gives the Federal Reserve "more room to stick with its projected two rate hikes for this year."

Naughty & Nice

The stock market continued its volatility this week, but with nowhere near the wild swings it suffered over the holidays. The Dow has resumed an upward trend and at this very moment (subject of course to immediate change) has gained back about 400 points since January 1st.

As Wall Street settles down, investors tend to stop worrying about safety and return to stocks. Consequently, yields on Treasury notes and bonds have started to inch back up, but mortgage rates have not followed suit. Freddie Mac says this week's 30-year fixed-rate mortgage hit a nine-month low.

If you are in the market to buy a home, there is more good news in Black Knight's current Mortgage Monitor. While home prices are still rising, the company's Home Price Index is marking significantly smaller increases than this time last year. From annual growth of 6.7% in February, the rate of appreciation had dropped to 5.4% by October.

Growth has slowed in 33 states and 71 metro areas, and nowhere is this slowdown more apparent than in the West, especially California. Over the same period, annual growth in the state moderated from 10% to 4.9%. For the first time since the recovery began, California has slower appreciation than the nation as a whole.

Key Indicators

ISM Non-Mfg Index Dec


[Prior 60.7]



6.888M Job Openings

[Prior 7.131M rev]


Coming Indicators

Friday, January 11



Wednesday, January 16

Retail Sales

Housing Market Index


Thursday, January 17

Residential Construction


Gold (Monex)

$1,292.00/ounce up


Crude Oil (Brent)

$61.44/brl up


U.S. Dollar to...

Euro                      0.8670 down

Japanese Yen  108.0800 up

Chinese Yuan      6.7841 down

Canadian Dollar  1.3219 down

Mexican Peso    19.2370 down


6-mo T-Bill Yield    2.52%

Up 1 bp  

10-yr T-Note Yield 2.74%

Up 9 bps


11th Dist Cost of Funds, 12/31

1.060 down 19 bps


Freddie Mac 30-Year

Avg Rate 1/10

4.45% down 6 bps


MBA - Mortgage Applications

Index Week ending 1/4


Up 23.5%

[Prior week down 9.8%]

Purchase Money Loans

Up 17.0%

[Prior week down 8.0%]

Refinancing Loans

Up 35.0%

[Prior week down 12.0%]


Jobless Claims 1/5

216,000 new claims

[Prior week 233,000 rev]

4-week moving avg 221,750 up


Employment Situation Dec

312,000 New Jobs Created

[Prior 176,000 rev]

Unemployment Rate 3.9%