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Market Update

Jobs Report Makes December Rate Hike A Lock, Raises Chance Of Four Hikes In 2019

(UPDATED: October 31st, 2018)


The latest monthly report on the employment situation in the US saw the unemployment rate dip to its lowest level since 1969. While the addition to non-farm payrolls was below expectations, upward revisions to prior months made this a very bullish report. The numbers will add to the Fed's confidence that it can raise interest rates more aggressively without it's having a negative impact on the US economy.


The Numbers: Here are several of the September report's highlights that are positive, some taken verbatim from the report itself:


  • The unemployment rate is now 3.7% versus 3.9% a month ago.
  • Nonfarm payroll employment increased by +134,000 in September.
  • August nonfarm payroll employment gains were revised up from +201,000 to +270,000.



Interest Rates Since 1975

While rates have ticked up over the last year or two, we are still well below historical rates. As you can see from this historical chart,  in the early 80’s, rates were more than 3x where they are now. The average historical interest rate is approximately 7.5%.

 

Think about this, we are still 35% lower than the historical average interest rate. However, based on the strength of our current economy and low unemployment numbers, there is a significant probability rates will continue to rise. This is why it is more important than ever to not just make sure you are in the correct mortgage, but that you also employ the BEST strategy.