Mortgage Market News

The first of two key labor market reports was released today showing that private employment slowed a bit in January from December, but the final number was better than expectations. ADP reported that private employment grew by 205,000 in January, below the 267,000 recorded in December, which was revised higher from 257,000. Solid growth was seen in service providers, which added 192,000 to the total. The 205,000 jobs created was above the 190,000 expected.
Over in the service sector, the Institute for Supply Management (ISM) reported that its ISM Service Index fell 2.3 points to 53.5 in January as growth in the service sector slowed a bit. A reading above 50 indicates the non-manufacturing sector economy is generally expanding; below 50 indicates the non-manufacturing sector is generally contracting. Within the report it showed that new orders as well as the employment component decreased.
Given the recent mediocre readings in economic data, chances of an interest rate hike from the U.S. Federal Reserve are decreasing. In addition, the Bank of Japan's recent move to a negative interest rate policy, weak economic growth in the fourth quarter, and a fairly dovish statement from the last week's Fed meeting have all lowered the chances even further. Traders now see less than a 30% chance of even one rate hike at any Federal Reserve meetings this year, according to data from the CME Group.
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