Concerns about economic growth were the primary influence on mortgage rates this week. With mostly weaker than expected data coming out during the week in the US and around the world, mortgage rates moved to new record low levels.

Friday’s release of the monthly Employment report revealed a weak level of job growth, which was bad news for the economy, but was favorable for mortgage rates. Against a consensus forecast of 100K, the economy added 80K jobs in June. As expected, the Unemployment Rate remained unchanged from last month at 8.2%. Average Hourly Earnings, a proxy for wage growth, actually increased a little more than expected. Under more normal conditions, the slight miss in the jobs number likely would barely be noticed. In the current economic environment, however, the reaction was significant.

Investors are not just worried about growth in the US. There are signs that the pace is slowing in most regions of the world. The European Central Bank (ECB) made a widely expected move to cut rates by 25 basis points to help boost economic growth. The ECB President acknowledged that weak economic growth is expected throughout the EU region. In addition, China surprised investors with a rate cut of its own. Over recent years, rapid growth rates in China have helped boost the economies of other countries, but recent data has indicated a slowdown in China, which will result in reduced demand for products and services from around the world.

Next week will be a light week for economic data. The detailed FOMC Minutes from the June 20 Fed meeting will be released on Wednesday, along with the Trade Balance. Import Prices will come out on Thursday. The Producer Price Index (PPI) focuses on the increase in prices of “intermediate” goods used by companies to produce finished products and will come out on Friday. Consumer Sentiment will also be released on Friday. There will be Treasury auctions on Tuesday, Wednesday, and Thursday.
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