The markets have been somewhat in a holding pattern as investors await next weeks Fed decision on interest rates.

By: Fred Arnold

Although, more than 70% of analysts interviewed believe that the Fed will raise rates, investors appear to be waiting for the announcement before making any major changes in their finance strategies.

Adding to the likelihood that the Fed will raise rates next week are this week’s ADP Employment Report and the National Labor Department Report.

• On Wednesday ADP released that their data which showed a giant increase in private payrolls by 298,000 for the month of February.
• This was more than 100,000 higher than the high end of analyst’s expectations.

The markets did not react with much more than a yawn as investors do not put much faith in the accuracy of the ADP report compared to the Labor Department data.

• H owever, it is important to note that in January ADP was relatively accurate with their estimates.
• Overall in the last year, ADP reporting has been much closer to the Labor Department numbers than they have been in years past.

Friday the Labor Department reported a gain of 235,000 jobs.

• Although the number is lower than ADP’s number, the results are still very strong.
• This growth in the labor force piggybacks on January’s gain of 238,000.
• This report all but cements the likelihood the Fed raising rates at the Fed meeting next week.

The Mortgage Bankers Association of American reported that last week purchase applications rose by 2.0 percent while refinances increased 5.0 percent.

• Mortgage rates had ticked down in the last week and that is likely the stimulus for the increase in refinances.
• Purchase applications, although continuing to rise, are being tempered by the fact that there is a significant lack of housing inventory across the country.

Oregon and Washington have been the main areas of the country lacking inventory for pretty much all of last year.

• This year, the housing shortage has expanded and has been felt in many more areas across the United States.
• The Northeast and South are now facing significant shortage in available housing inventory for sale.
• The Midwest has also experienced a decline in housing inventory but not to the degree of the other regions.

First time jobless claims continue to remain extremely low.

• Down to 243,000, along with this week’s very strong employment reports, the decline in claims is likely to continue.

Next week’s potential market moving reports are:

• Monday March 13th – Labor Market Index
• Tuesday March 14th – FOMC Meeting Begins
• Wednesday March 15th – MBA Applications, FOMC Announcement, FOMC Forecasts, Retail Sales, Consumer Price Index, and the Housing Market Index
• Thursday March 16th – First Time Jobless Claims, JOLTS Report, and Housing Starts
• Friday March 17th – Industrial Production and Consumer Sentiment

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at (661) 505-4300.