Another Peaceful Day in the Mortgage Markets

Another peaceful day in the bond and mortgage markets as the mortgage rates fell a little bit more today – but I anticipate that will all change in the very near future when the markets become even more volatile tomorrow.  The rates are just like the gas prices we have seen in the last several years, as it is the nature of the mortgage market for rates to move up more abruptly than they move downward. 

Tomorrow begins the monthly three day employment debate – it is anticipated that ADP will report private jobs grew more than they did in the month of February.  Once this hits the markets, this will be the basis for all to talk about until Friday morning when the ‘official’ BLS data is released. Presently the BLS is expected to say non-farm jobs were up 247K and private jobs up 240K with the unemployment index at unchanged 5.5%. If ADP’s data is substantially deviant to the estimates look for economists to back to their cubby holes and re-evaluate the BLS expectations.

What is it that I and many others are watching for - the progress of negotiations between Iran and the US on the nuke deal. Some progress but still no deal to further the talks, even though the US thought there was enough there to continue.  Personally, Iran is a very scary country in terms of mid-east peace and having a nuclear bomb should never happen. But, enough of that - our market interest is directed to oil prices. If the IMF relaxes sanctions and Iran starts selling its oil on the open market the price of the black gold (Texas tea) will decline and will help keep interest rates from increasing much. The two big remaining differences were the timing of U.N. Security Council sanctions relief and what work Iran would be permitted to do in the final years of an agreement.

Beside ADP tomorrow, March ISM manufacturing index, February construction spending, and March auto and truck sales.  Tomorrow not so sure with the employment data on Friday.  I have commented many times here that the data is usually well off forecasts and generates huge volatility in the bond and mortgage markets. On the February employment report the job growth was a lot stronger than estimates, as the experience from these first weeks in the month always have me worried as it could go either way.

In summary, after getting through Monday and Tuesday's relatively quiet month end gyrations and activities, things pick up starting tomorrow with the ADP jobs number and the ISM report. Jobless claims on Thursday could, but may not, add to any volatility/positioning ahead of Friday's jobs report. As the Fed is now saying they are more data dependent on when to raise rates.  I would think a defensive approach may be prudent as far as your lock/float decisions go. And most definitely if you are closing soon. The rest of the week should be interesting.