A better than expected monthly jobs report pushed bank rates higher going into the Independence Day holiday weekend. The monthly jobs report which is released on the first Friday of the month (with the exception of holidays) is often a big catalyst for bank rates in one direction or the other. Surprise figures can be especially powerful at moving the markets and this past week was no exception.
The consensus estimate on job creations for the month of June was roughly 215,000 new jobs. The release on Thursday from the Labor Department showed an increase of new jobs in June of 288,000. The surprisingly strong job numbers pushed bond prices lower and interest rates higher. There are number of reasons why the report leads to a rise in interest rates following a strong employment gain.
This month’s jobs report marks the best sequential run of monthly job creations in the past few years. Increased job creations is a sign of an improving an economy with greater demand and production. The increased demand will often push wages and prices higher leading to higher inflation rates, a key component of nominal interest rates. An expanding economy will also lead to increased loan demand and higher interest rates for new loans. Furthermore, with the Federal Reserve steering interest rates lower over the past few years due to a weak economic climate, the strong report should push the Fed towards a less accommodating monetary policy leading to rising interest rates driven by the Fed sooner than was anticipated.
The other side of the story is that interest rates really did not move with the force one might have expected after the jobs numbers were released. Considering the fairly substantial surprise in the report combined with some upward revisions to previous reports, interest rates did not shoot through the roof. The increase in savings rates and loan rates was hardly enough to break through the top of the recent rate range that has been in place for several weeks.
The benchmark, ten year Treasury rate was lifted by 11 basis points over the course of the holiday shortened week. The ten year increased to 2.65% from 2.54% in the week earlier. The five year was impacted a little more relative to its term. The five year Treasury rate was up by ten basis points pushing the rate to 1.74% from 1.64% in the previous week. Two year Treasuries moved higher by seven basis points to 0.52%.
Mortgage rates were whacked slightly more than Treasury rates this past week. The average 30 year mortgage rate in the weekly SelectCDrates.com bank rate survey was ratcheted up by just under 12 basis points to 4.269%. 30 year jumbo mortgage rates rose by a hair more than the conforming 30 year loans. The average jumbo mortgage rate increased to 4.225%, a rise of 12.5 basis points over the prior week. FHA mortgage rates followed with an increase of almost ten basis points which pushed the average rate past 4.00% once again. The average 30 year FHA rate ended the week at 4.030%.
CD rates were understandably slow to react to the rate changes. The best CD rates available nationally made only slight increases week over week. The average CD rate measured by the SelectCDrates.com CD rate index increased by just 3/1000ths of a percent. The CD rate index closed out the week at 1.114%. The index measures the highest CD rates available nationally across several different maturities including three month CDs, six month CDs, one year CDs, two year CDs, and five year CDs.
The best three month CD rates and one year CD rates were unchanged in the week at 0.402% and 1.060%, respectively. The best six month CD rates available nationally increased by one basis point to 0.747%. Two year CD rates were boosted by 5/1000ths of a percent to 1.207%. The five year term certificates saw an uptick of 4/1000ths of a percent to an average yield of 2.156%.
The best money market account rates and savings account rates saw no change over the week. The average rate for savings and money market accounts remained at 0.897%.
There were some minor changes in credit card rates offered by the major issuers however the rate changes did not move the needle for the average consumer credit card rates across all categories of credit card types. The average credit card interest rate on new cards offered held at 13.87%, a number that has not changed by very much throughout the year.
The SelectCDrates.com weekly bank rate survey provides a detailed report on bank savings rates and lending rates by different consumer rate categories. The current bank rate survey is for the week ending July 3, 2014 with rates obtained on or after that day. The weekly rate survey presented the following interest rates and their changes for mortgage rates, CD interest rates, credit card rates, money market rates, savings account rates and Treasury rates:
Bank Rates Market Recap with the Weekly Change in Rates Offered for July 3, 2014
CD interest rates:
Composite CD interest rate index 1.114 percent (up .003 percent)
3 month CD rates 0.402 percent (unchanged)
6 month CD rates 0.747 percent (up .01 percent)
1 year CD rates 1.060 percent (unchanged)
2 year CD rates 1.207 percent (up .005 percent)
5 year CD rates 2.156 percent (up .004 percent)
Money market and savings account rates:
Bank money market rates and savings account rates 0.897 percent (unchanged)
30 year mortgage rates 4.269 percent (up .117 percent)
15 year mortgage rates 3.419 percent (up .139 percent)
20 year mortgage rates 4.082 percent (up .149 percent)
30 year jumbo mortgage rates 4.225 percent (up .125 percent)
30 year FHA mortgage rates 4.030 percent (up .097 percent)
Credit card rates:
Credit card rates for new credit card offers 13.87 percent (unchanged)
US Treasury rates:
Six month Treasury rate 0.06 percent (unchanged)
One year Treasury rate 0.11 percent (up .01 percent)
Two year Treasury rate 0.52 percent (up .07 percent)
Five year Treasury rate 1.74 percent (up .10 percent)
Ten year Treasury rate 2.65 percent (up .11 percent)
All bank savings rates and lending rates are based on surveys conducted by SelectCDrates.com at the close of July 3, 2014 with all of the interest rates obtained directly from the banks within the SelectCDrates.com survey. Treasury rates are obtained directly from the Department of the Treasury.
For more detailed interest rate data on mortgage rates, CD rates, credit card rates and savings account rates for the week ending July 3, 2014 please see: 3 month CD rates, 6 month CD rates, 9 month CD rates, 1 year CD rates, 2 year CD rates, 4 year CD rates, 5 year CD rates, 30 year mortgage rates, 15 year mortgage rates, FHA mortgage rates, 20 year mortgage rates, 10 year mortgage rates, jumbo mortgage rates, VA mortgage rates, best interest checking accounts and best credit card rates.