Economic update for the week ending December 7, 2019
Employers Added 266,000 New Jobs in November - Unemployment rate dropped to lowest level since 1969 - The Department of Labor reported that 266,000 new jobs were added in November. This eclipsed the 187,000 new jobs expected by economists that were polled. The unemployment rate dropped to 3.5%, from 3.6% in October. That marked the lowest unemployment level since 1969. Average hourly wages grew 3.1% from one year ago.
Stocks rally after blockbuster jobs report to recover from losses earlier in the week - Despite strong Black Friday and Cyber Monday retail holiday sales, stock markets dropped sharply early in the week after President Trump announced increased tariffs on steel and aluminum from Argentina and Brazil on Monday. Tuesday, he stated that he was in no rush to complete a trade deal with China, and that it may not happen until after the election. New tariffs are set to kick in December 15th, 2019. That’s a date we will be looking at. On Wednesday, he announced raising tariffs on French and UK imported wines and cheeses from 25% to 100%, because they were not paying their expected 2% of GDP to NATO. Fortunately, on Friday, a blockbuster jobs report stunned the market. Stocks made up all their losses from earlier in the week. Investors are quite optimistic with so many new jobs created, such low unemployment, historic stock market levels, and robust holiday retail sales. The Dow Jones Industrial Average closed the week at 28,015.16, down 0.1% from 28,051.41 last week. It is up 20.3% year to date. The S&P 500 closed the week at 3,145.91, almost unchanged from 3,140.98 last week. It is up 25.3% year to date. The NASDAQ closed the week at 8,656.53, down 0.1% from 8,665.47 last week. The NASDAQ is up 30.5% year to date.
U.S. treasury bond yields end week higher - The 10-year treasury bond closed the week yielding 1.84%, up from 1.78% last week. The 30-year treasury bond yield ended the week at 2.29%, up from 2.21% last week. We watch treasury bond yields because mortgage rates often follow bond yields.
Mortgage rates remain near historic lows - The December 5, 2019 Freddie Mac Primary Mortgage Survey reported mortgage rates for the most popular loan products as follows: The 30-year fixed mortgage rate average was 3.68%, unchanged from 3.68% last week. The 15-year fixed was 3.14%, almost unchanged from 3.15% last week. The 5-year ARM was 3.39%, down slightly from 3.43% last week.