Freddie Mac: Mortgage Rates decrease in latest Survey, 15-Year at All-Time Low

From Freddie Mac today: Mortgage Rates Keep Pushing Lower

Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates moving lower for the fifth consecutive week amid the weaker than expected first quarter economic growth advance estimate. The 30-year fixed-rate mortgage at 3.35 percent is hovering just above its all-time record low of 3.31 percent set the week of November 21, 2012. The 15-year fixed-rate mortgage set a new all-time record low this week at 2.56 percent, eclipsing the record set last week.

30-year fixed-rate mortgage (FRM) averaged 3.35 percent with an average 0.7 point for the week ending May 2, 2013, down from last week when it averaged 3.40 percent. Last year at this time, the 30-year FRM averaged 3.84 percent.

15-year FRM this week averaged 2.56 percent with an average 0.7 point, down from last week when it averaged 2.61 percent. A year ago at this time, the 15-year FRM averaged 3.07 percent.

Click on graph for larger image.

This graph shows the the 30 year and 15 year fixed rate mortgage interest rates from the Freddie Mac Primary Mortgage Market Survey®.

The Freddie Mac survey started in 1971 and 30 year mortgage rates are currently near the record low set last November.

Employment Situation Preview

On Friday, at 8:30 AM ET, the BLS will release the employment report for April. The consensus is for an increase of 153,000 non-farm payroll jobs in April, and for the unemployment rate to be unchanged at 7.6%.

Here is a summary of recent data:

• The ADP employment report showed an increase of 119,000 private sector payroll jobs in April. This was below expectations of 155,000 private sector payroll jobs added. The ADP report hasn't been very useful in predicting the BLS report for any one month. In general this suggests employment growth below expectations.

• The ISM manufacturing employment index decreased in April to 50.2% from 54.2% in March. A historical correlation between the ISM manufacturing employment index and the BLS employment report for manufacturing, suggests that private sector BLS reported payroll jobs for manufacturing decreased by close to 20,000 in April. The ADP report indicated a 10,000 decrease in manufacturing jobs.

The ISM non-manufacturing (service) employment index will be released on Friday after the employment report.

• Initial weekly unemployment claims averaged about 342,500 in April. This was down from 355,000 in March, and the lowest average for a month this year.

For the BLS reference week (includes the 12th of the month), initial claims were at 355,000; up from 341,000 in March.

• The final April Reuters / University of Michigan consumer sentiment index decreased to 76.4, down from the March reading of 78.6. This is frequently coincident with changes in the labor market, but also strongly related to gasoline prices and other factors. Note: the preliminary index dipped mid-month suggesting some weakness during the reference period (we saw the same pattern in March with the preliminary reading lower).

• The small business index from Intuit showed 20,000 payroll jobs added, up from 15,000 in March. This index remains disappointing.

• And on the unemployment rate from Gallup: Seasonally Unadjusted Unemployment Declines in April

Gallup's unadjusted unemployment rate for the U.S. workforce was 7.4% for the month of April, down more than half a point since March 2013, and nearly a one-point drop from April 2012. This is the second-lowest monthly employment rate Gallup has measured since it began tracking employment in 2010. ...

Gallup's seasonally adjusted U.S. unemployment rate for April was 7.8%, unchanged from March 2013, but down almost a full point compared with April 2012.

Note: So far the Gallup numbers haven't been very useful in predicting the BLS unemployment rate.

• Conclusion: The employment related data was mostly disappointing in April.  The ADP and ISM manufacturing reports suggest a decrease in hiring (the ISM service report will not be released until after the BLS report), the small business index increased but was still weak, and weekly claims for the reference week were higher in April than in March (although claims for the month were lower). 

There is always some randomness to the employment report, but my guess is the BLS will report somewhat below the consensus of 153,000 jobs added in April.

Trade Deficit declined in March to $38.8 Billion

The Department of Commerce reported:

[T]otal March exports of $184.3 billion and imports of $223.1 billion resulted in a goods and services deficit of $38.8 billion, down from $43.6 billion in February, revised. March exports were $1.7 billion less than February exports of $186.0 billion. March imports were $6.5 billion less than February imports of $229.6 billion.

The trade deficit was lower than the consensus forecast of $42.4 billion.

The first graph shows the monthly U.S. exports and imports in dollars through March 2013.

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Exports declined slightly in March, and imports declined even more, so the deficit declined.

Exports are 11% above the pre-recession peak and unchanged compared to March 2012; imports are 4% below the pre-recession peak, and down 6% compared to March 2012.

The second graph shows the U.S. trade deficit, with and without petroleum, through March.

The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

Oil averaged $96.95 in March, up from  $95.96 per barrel in February, but down from $107.95 in March 2012.  Oil import prices should start falling in April.

The trade deficit with the euro area was $8.3 billion in March, down slightly from $8.8 billion in March 2012.

The trade deficit with China decreased to $17.9 billion in March, up from $21.7 billion in March 2012.   Note: The decline in the trade deficit with China was related to the timing of the Chinese New Year.

Weekly Initial Unemployment Claims decline to 324,000

The DOL reports:

In the week ending April 27, the advance figure for seasonally adjusted initial claims was 324,000, a decrease of 18,000 from the previous week's revised figure of 342,000. The 4-week moving average was 342,250, a decrease of 16,000 from the previous week's revised average of 358,250.

The previous week was revised up from 339,000.

The following graph shows the 4-week moving average of weekly claims since January 2000.

Click on graph for larger image.


The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 342,250.

Weekly claims were the lowest since 2008, and the 4-week average is just above the low for the year. Claims were below the 345,000 consensus forecast.