Friday’s Jobs Report from the Bureau of Labor Statistics was a big market mover, showing that 80,000 jobs were created in October, which was just slightly below expectations. In addition, 104,000 private sector jobs were created, also just below expectations while the unemployment rate dropped to 9%, from a previous reading of 9.1%.A big positive in the report was once again upward revisions to prior month’s readings, which showed 102,000 more jobs created in the two previous months than what was originally reported.

The takeaway from the report is that it doesn’t appear the economy is slipping into another recession…at least not yet. The labor market continues to create jobs, but at a very slow and uneven pace. Until we see significant job growth–north of 150,000 each month, for a sustained amount of time–we won’t see meaningful improvement in the economy or the unemployment rate. This turn means that rates should continue to hover at low levels, albeit in a volatile fashion.

Also limiting how high our rates can go is the ongoing European drama. The removal of the referendum (Greek Prime Minister George Papandreou had announced he would put the Euro rescue plan to a referendum or vote amongst the Greek people) is one piece of uncertainty taken away from the market–and that was a big one. However, there are still so many things that can and probably will go wrong until the European leaders put a big, realistic, attainable solution into action. For instance, Italy’s Bond yields continue to inch higher, suggesting that their debt problems won’t easily be solved and continue to creep towards an unmanageable state.

Plus, Fed Chairman Ben Bernanke said Wednesday during his speech after the regularly scheduled meeting of the Federal Open Market Committee that purchases of Mortgage Bonds are being considered–which is another factor that could benefit home loan rates.

Here are mortgage rates for the beginning of this week….

 Conventional 30 Yr. Fixed:  3.95%

Conventional 15 Yr. Fixed:  3.875%

Conventional 5/1 ARM: 2.75%

FHA/VA 30 Yr. Fixed:  3.75%

FHA/VA 5/1 ARM:  3.50%

Jumbo 30 Yr. Fixed:  4.625%

Jumbo 5/1 ARM:  2.875%

Forecast for the Week

While the Stock Markets are open Friday, the Bond Market will be closed in honor of Veterans Day. And with fewer economic reports this week–and with earnings season essentially behind us-the Bond Market will take direction from a number of factors.

•The first major report will be released on Thursday when Weekly Jobless Claims are reported. Last week’s report showed that weekly claims fell below 400,000 to 397,000, which was better than the 401,000 that was expected.

•The markets will also get a new read on how American consumers feel about the economy with the Consumer Sentiment Index on Friday.

In addition to those reports, the headlines coming out of Europe will continue to influence the markets here in the US, including Bonds and, as a result, home loan rates. Also, this week’s Treasury auctions totaling $72 Billion could be a big market mover, depending on how they’re received.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.

Bonds and home loan rates were able to take advantage of the decrease in Stocks last week, due in part to the uncertainty out of Europe. I’ll be monitoring this situation closely in the weeks ahead.

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