More bad news came for the economy last week.  131K jobs were lost in the month of July even as private jobs showed an increase of 71K.  If that pace holds, it could take as long as seven years just to get back the 8.5 mil jobs that have already been lost.  Weekly jobless claims released yesterday hit a four month high at 479K new unemployment claims.  While the manufacturing and service sectors are issuing decent reports, the main concern is will the spending continue as consumers appear to be very money-conscious right now.  The stock market appeared to have ignored much of the news last week as the DJIA finished the week up 185 points, the NASDAQ up 34 points and the S&P up 21 points.

All of this poor data for the economy has been very good for mortgage rates and they continue to find new lows.  The 10 year note finally broke through a level of resistance at 2.88% and will likely go lower as the economy continues to sputter.  On the week, the 10 year note declined a total of 10 basis points.

Next week will probably begin with some pressure on the rate markets with the Treasury set to auction $74B of notes and bonds.  The Treasury is borrowing at a rate of $178B per month in 2s through 30s, funding a deficit budget that will top $1.6T this fiscal year.  Scary!

The Federal Open Market Committee (FOMC) meets Tuesday and Wednesday this week.  The key economic data will be released on Thursday and Friday of this week with the weekly jobless claims, July retail sales, July CPI and the mid-month University of Michigan consumer sentiment index.

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