Unemployment Rate Falls Roger Odoardi During the first week of the new year, mortgage rates continued to be influenced by the same factors as in 2011. Stronger than expected US economic data roughly offset continued concerns about Europe, and mortgage rates ended the week nearly unchanged. Friday’s Employment report provided further support that the US economy is gaining strength to begin the new year. Against a consensus forecast of 150K, the economy added 200K jobs in December. The Unemployment Rate unexpectedly fell to 8.5%, the lowest level since February 2009, from 8.7% in November. The decline was partly due to the increase in jobs and partly due to people dropping out of the labor force. Average Hourly Earnings, a proxy for wage growth, increased 2.1% from one year ago. This was an encouraging report in nearly every area. While prospects in the US appear to be picking up, signs of improvement in Europe have been frustratingly slow to emerge. Bond yields in troubled countries remained at elevated levels, and European banks had to pay higher than expected costs to raise additional capital. Investors are still demanding very large premiums to lend money to European countries which are considered risky, making recovery efforts even more costly. Relatively safer assets, such as US mortgage-backed securities (MBS), continued to benefit this week from the lack of progress in Europe. Also Notable: • The ISM Manufacturing index rose to the highest level since June • The value of the euro relative to the US dollar fell to the lowest level since September 2010 • Tensions with Iran pushed oil prices up to $103 per barrel, the highest level since May • The Treasury will auction $66 billion in 3-yr, 10-yr, and 30-yr securities next week Average 30 yr fixed rate: Last week: -0.03% This week: 0.00% Stocks (weekly): Dow: 12,400 +200NASDAQ: 2,675 +75 Week Ahead Next week, the Fed’s Beige Book will come out on Wednesday. Retail Sales will be released on Thursday. Retail Sales account for about 70% of economic activity. Import Prices, the Trade Balance, and Consumer Sentiment will come out on Friday. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday. To learn more about news impacting interest rates and mortgage markets, go to www.mbsquoteline.comTo learn more about the newsletter, please call 800-627-1077All material Copyright © Ress No. 1, LTD and may not be reproduced without permission. Roger Odoardi Roger is an owner and licensed Loan Officer at Blue Water Mortgage. He graduated from the University of New Hampshire’s Whittemore School of Business and has been a leader in the mortgage industry for over 20 years. Roger has personally originated over 2500 residential loans and is considered to be in the top 1% of NH Loan Officers by leading national lender United Wholesale Mortgage.