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Mortgage Rates Drop Even Further
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June 3, 2005 LOS ANGELES -- On Friday, the U.S.
Department of Labor released the much anticipated full Employment Situation
Report. The report reflects figures related to U.S. Jobs for May. Among numerous
calculations and numerated facts, of particular importance is the measure of the
number of unemployed persons as a percentage of the total labor force. It is a
primary indicator of economic activity on a monthly basis, and important right
now with regard to how it affects mortgage rates.
Friday's report indicates that 78,000 new jobs were created in
May. This came as a shock to many, as forecasts indicated previously that there
would be somewhere in the range of 175,000 new jobs created in May. The bottom
line is that the report shows significant potential for deceleration of job
growth, which will further contribute to economic weakness.
On the other side of the proverbial coin, U.S. bond market
heavy-hitters are smiling widely, as they are likely perceiving the report's
data as a sign of lower inflation.
After the report was released Friday morning, the 10 year
Treasury yield dropped to 3.83%. This is a low we haven't seen since 2004. As a
result, home lending mortgage interest rates continue to drop. I anticipate a
decrease in rates in the forthcoming week, or at very minimum stability at these
low levels.
- By Stockton Marquette, Mortgage Market Analyst and Columnist.
Email Mr. Marquette.
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