Mortgage Rates End Impressive Run

Mortgage rates finally ended an impressive run where we saw the rate decrease in some fashion following the UK's vote to exit the European Union.  What was surprising that a streak like this does not occur that often, as it maintained the momentum until they were right in line with all-time lows yesterday.   As I mentioned last night, after this length of time, I had a hunch that the inevitable correction that almost never takes more than 3 more days to show up.  In that sense, today's moderate move higher in rates is not much of a surprise. 

Truthfully, it was a quiet day ahead of an employment report. Tomorrow I am expecting employment data will reverse the meager 38K jobs reported in May; May likely will be revised upward and June is expected +210K jobs, and the unemployment rate up to 4.8% from 4.7%.  May was an anomaly, no one believes it will be repeated, the question now is how much better job gains will be and the labor participation rate will decline.

If job gains exceed expectations and there is a major increase in May jobs, the immediate mumbling will be that the Fed will have an open door to increase rates. If you hear that ignore it - the Fed has no open door now to increase interest rates. That said, the constant comments from Fed officials also should be ignored if they try again to pump up expectations, and you all know what I think about what they say out in public. . Any increase in the FF rate will send the dollar screaming higher. No country wants its currency to climb against other currencies.

In a world as we now have, politically and economically, one thing to keep always in mind - no matter who is talking or writing we are all in a new environment. Speculation is rampant and will continue to be. I will have my take, others will have theirs - at times I will hit it, other times others will. Wish I could say otherwise but facts are, markets and central banks are tilting at windmills now and analysts are having a time trying to cut the wheat from the chafe.

Crude oil tumbled today on the weekly crude inventories. Crude has failed repeatedly at $50.00, now at $45.00 and the next support is at $43.00.

In summary, tomorrow brings June's NFP jobs report, often touted as the most meaningful monthly economic release.  Today's slight pullback in bond markets surprised no one, as it is simply not feasible to post gains every day for weeks on end.  Frankly, I am encouraged the losses have been minimal.  It is always a tough call on floating through NFP, but I am still waiting to lock several August closings.  I guess we all will know what happens in the morning.