Mortgage Rates Up with Jobs Report Data

Mortgage rates moved higher today following the unexpected number that came from the Jobs Report.  The Employment Situation is widely regarded as the single most important economic report month in and month out.  It always has the potential to move markets - especially interest rates.

Stock indexes improved with a strong rally. After two weeks of drifting sideways and looking more like a correction was due, the rebound today has investors giddy. The bond market got tagged pretty well, the 10yr ended at 1.59% while the MBSs took a bath of a negative 33BPS.  I know that I mentioned that it might be a good idea to float into the report, but I did not anticipate this big of a difference.  At least I was wise when I was talking the last few days to get them locked if you were about to close, as now, the risks have come out and now you need to take a look at where you stand.

The headlines were good, the guts not so much - the real number to look at if the U-6 at 9.7%. My take but not the markets.  Stock indexes rallying, the bond and mortgage market under selling pressure. As usual the debate is lively, is it a report that will lead the Fed to consider a rate increase in September? No! The Fed is in no position to increase rates and will not likely move this year. Yesterday the BofE cut rates 0.25%, added more QE purchasing gilts and some corporate debt, and lowered its economic outlook for next year.

Next week we do not see any news until Tuesday with Q2 productivity and unit labor costs, 3 yr note auction. Wednesday Jolts job openings, 10yr note auction. Thursday July import and export price, weekly claims, 30yr bond auction. Friday July retail sales, July PPI, June business inventories, August consumer sentiment.

In summary, July's NFP report beat expectations handily, adding to June's robust gains and sending rates upward.  My biggest concern over today's action is not our rates now compared with Thursday, it is whether our trend of stable to lower rates is imperiled.  Most of my customers were locked up, and that move was the right call.  Next week's movement will be crucial, may indicate where we go from here.