Capital Markets Update

By Louis S. Barnes                                    Friday, February 6, 2015

Mortgage interest rates increased this past week as today’s employment report for January was stronger than expected. January Non-Farm Payrolls increased by 257k on expectations that they would increase by 230k. November and December Non-Farm Payrolls were revised upward by 147k.   Private Payrolls increased by 267k on expectations that they would increase by 229k. Average Hourly Earnings increased by 0.5%, its strongest increase since November of 2008. The unemployment rate increased to 5.7% from 5.6% mainly due to 700k more people entering the job market. As a result, the Fed may look to increase short term interest rates sooner than anticipated. Other economic data was mixed. Economic data stronger than expected included the January ISM Services Sector Index and weekly jobless claims. Economic data weaker than expected included December Personal Spending, December Construction Spending, the January ISM Manufacturing Index, December Factory Orders, January ADP Private Jobs, and the December Trade Balance report. Personal Spending declined the most in five years.

The Dow Jones Industrial Average is currently at 17,919, up over 700 points on the week. The crude oil spot price is currently at $51.25 per barrel, up over $3 per barrel on the week. The Dollar weakened versus the Euro and strengthened versus the Yen on the week.

Next week look toward Thursday’s Jobless Claims and Retail Sales and Friday’s Consumer Sentiment Index as potential market moving events. Also, the Treasury will auction 3-Year Notes, 10-Year Notes, and 30-Year Bonds.