Mortgage Rates Showing Signs of Volatility

Mortgage rates are moving slightly lower so far today, but I am worried on what is happening overseas and the volatility surrounding everything.  The all anticipated Jobs report came out today, and what a shock as it came in at 95K versus an estimated 180K, along with January and February numbers were lowered by a total of 48K.  Average Hourly Earnings and Hourly Wages were in line and the Unemployment Rate dropped to 4.5%.

Initial reaction shot MBS prices up 41 bps from yesterday, the 10 yr dropped to 2.27% and stock indexes that were trending higher took an initial hit to -60 on the DJIA. Knee jerk reactions to any employment report always volatile. Within an hour, the markets settled down.

Not news by now - the US launched missiles on an air field in Syria last night. Looks like it is a one-off event to drive home the point that the US will not sit back any longer when genocide attacks occur. Russia not reacting much, suspending the cooperation with the US on aircraft flights to avoid any mistakes. Per news reports Russia was warned prior to the cruise missiles. The decision to move this quickly underscores a huge difference in the US stance than had existed the last eight years - no more threats without action.

It is viewed in some circles as evidence the US won’t stand still much longer with North Korea’s nuclear ambitions. The Chinese leader Xi Jinping is visiting Trump at his estate in Florida when the attack order was given; hopefully he didn’t take as a direct insult and a veiled warning of the USs increased willingness to use military force. China has to settle the North Koreans, if China refuses to flex its mighty muscle the US will be out there on a huge limb.

The question now is what will Russia do, if anything other than the rhetoric we already have heard? Most doubt Russia will do anything but rumble - in fact Russia is likely to be more pissed at Assad than the US that he did it (chemical attack). Russia supports Syria and the belligerent use of banned chemical weapons drags Russia into more conflict with the US that we believe Putin did not want to happen, bet a buck Putin would like to punish Assad. If this is correct, the missile attack last night will fade into the background as far as markets are concerned.

My suggestion, watch the 10yr and act accordingly.