TEXAS (San Antonio Business Journal) - Four of the five best labor markets in the country are in Texas, according to a new study compiled by Portfolio.com.

Austin leads the way, followed by San Antonio. Houston ranks fourth and Dallas-Fort Worth fifth.

Landing at third is Baton Rouge.

All 100 metropolitan areas in the study, including those in Texas, have seen employment decline since last year. However, while 5 percent of the nation's private-sector jobs have disappeared since June 2008, the collective decline for the 'Texas Four' has been 2.6 percent.

The Texas markets still have 589,500 more jobs than they did five years ago.

Portfolio.com used a nine-part formula to analyze employment trends in the nation's 100 largest labor markets. The formula used midyear U.S. Bureau of Labor Statistics data for 2004-09, including unemployment rates and trends, and raw and percentage changes in private-sector employment.

Look for mortgage rates to rise as the Fed "weans" the market off of government support of the mortgage and housing markets.

Mortgage rates have remained relatively low and stable for most of 2009. This is due in large part to the Federal Reserve's decision to purchase large quantities of Mortgage Backed Securities (MBS) for the purpose of providing support to both the mortgage and housing markets.

In the recent Federal Open Market Committee meeting in late September, the Fed said they will not increase the quantity of MBS(s) they will purchase; however, they will lengthen the time they are "in the market". They have extended their purchasing schedule from December 31, 2009 to March 31, 2010 allowing for a phasing-out period. This will allow them to slow down their purchasing of MBS(s) and to wean the market off government support. It is estimated that the Fed will cease buying Mortgage Backed Securities in March, 2010. During the phase-out period, the mortgage market will experience increased volatility and rising interest rates. If you reduce demand (purchasing) the return must go up to attract other purchasers. It is simple mathematics.

Additionally, the Fed will discontinue its purchase of Treasuries at the end of October, 2009. This should cause the price of Treasuries to decrease because of weakened demand. If the price decreases the rate increases. In order for Mortgage Backed Securities to compete with Treasuries for investor dollars, rates on Securities will most likely rise also.

Yesterday's 30 year Treasury auction was less than stellar. This caused a sell off in the Mortgage Backed Securities market. Last night Fed Chairman Ben Bernanke said the Fed will leave rates (fed funds & overnight) low for a while to insure a recovery. He went on to say they would raise rates aggressively to combat inflation after the economy was on track. Inflation is coming - make no mistake - and with it higher rates.

Today, MBS are down 63 basis points. This is a continuation of yesterday's jitters in the MBS market. We may very well be seeing the last of the "low" rates. If you have any intention of refinancing or purchasing I strongly suggest you react now!