Investors are nearly certain of a rate hike before years end with another strong labor market report. Upward revisions even added another 35k to prior months. Wage growth showed another decent gain that was 2.3% higher than a year ago. All while the European Central Bank announced additional stimulus but fell far short of expectations of the amount of stimulus that would be implemented. The European Central Bank will extend its bond buying program for another 6 months but the quantity will remain at $60 billion euros. Investors were hoping, and expecting to see a large increase in the amount going towards bond purchases and caused a pretty good pull back on MBS prices for the day.
While Europe and other countries are continuing to expand or extend stimulus for their struggling economies, the US is set for its first rate hike and it is shaping up to be done before the end of this year. Manufacturing and Retail data have continued to disappoint, but labor reports have had several surprises that will put the pressure on the Fed to react and start the slow process of normalizing interest rates. December 16th will be the tell-all date. All eyes will be on the Fed’s meeting and how the vote comes out. Vegas will certainly be leaning toward a certain rate hike without any huge events happening between now and the 16th. We will have to wait and see how markets will react.