Market Analysis

Mortgage rates have been flat the past two days but volatility set in a bit this afternoon as investors prepare for Friday morning's December Non-Farm Payroll report.  Analysts have been revising their projections lower in terms of job losses, with some suggesting they could be as low as the 5,000 range.  In general, the market is expecting job losses in the 20,000 range.  A number that exceeds 20,000 should be supportive of steady to slightly lower mortgage rates.  A number that falls closer to the 5,000 range would be expected to put upward pressure on mortgage rates.

In economic news over the past two days, on Wednesday ADP reported 84,000 private sector job losses for December, which was higher than the 75,000 the market had been expecting, but much lower than the 169,000 reported in November.  The Institute of Supply Management (ISM) Services Sector index for December came in at 50.1, which was slightly lower than the 50.5 the market had been expecting.  On Thursday, Initial Jobless Claims for the week ended 1/2/10 were up by 1,000 which was better than the 13,000 increase the market had been expecting. Continuing Claims for the week ended 12/26/09 were down by 179,000 to 4.802 million which was much better than the expected increase of 57,000.  However, much of the reduction in continuing claims was most likely due to benefits running out for those individuals rather than from them finding employment.