The economic data coming out of the US this week showed that not only is a recession highly unlikely anytime soon, but the economy is actually reaccelerating from the slowdown seen last fall.
Back in October and November, the Fed was very hawkish and suggested that three rate hikes would come in 2019. This caused angst and fear that economic conditions would slow to a recession. It also led to a sharp decline in stocks and consumer confidence.
Fast forward just a couple months to January 2019, and the Fed completely reversed their position, signaling there is no rate hike coming in 2019 or anytime soon. This new “wait and see” position from the Fed has set off a rally in stocks and a surge in consumer confidence.
It has also sparked confidence and certainty in the business climate, thereby giving corporations reason to hire and retain employees.
And that was clearly evident this week as we saw yet another decline in Initial Jobless (Unemployment) Claims and the rate at which people are being fired from their jobs.
Bottom line: the economic resurgence has put upward pressure on rates this past week, but they remain near 12-month lows.
Looking ahead: corporate earnings will continue to dominate the headlines, and what companies say about the future could have an effect on the financial markets.
Housing data along with Gross Domestic Product will be released in the upcoming week, and the markets will find out if the economy continues to strengthen.
In addition, global economic headlines will help define whether or not the reacceleration of US and global economic data will continue.
Should it continue, stocks and home loan rates are likely to edge higher still.