Mortgage Rates Trending Higher to Start Job Reports Week

Mortgage rates are trending slightly higher this morning to the start of the most important week of each month – Job Reports.  After last week where there was very little movement and low volatility, this is a big week for economic data, and more discussion on tax cuts. The March job growth was minimal, April according to forecasts will be better. Also, besides the data the FOMC meeting begins Tuesday with the policy statement Wednesday afternoon (Yellen will not have a press conference).

The FOMC will not increase rates when the policy statement is released Wednesday afternoon; the focus will be on how the Fed sees the economy now and what they see in the outlook. Expect more confirmation that the Fed is still looking to increase rates this year, but with the usual caveat of data dependency.

We get a bunch of wage and labor-related data this week which include Personal Income, ADP Private Payrolls, Challenger Job Cuts, Unit Labor Costs and some internals from ISM data. But its Big Jobs Friday that will wag the dog's tail. Of interest to the marketplace, is not so much this month's Non-Farm Payroll (NFP) reading but more so the revision to last month's 98K reading. The biggest focus will be on wages with the monthly change in average hourly wages.

The geopolitical issues continue to provide the most support for pricing. Domestically, a government shutdown was averted on Friday with a last-minute stop-gap measure that was supposed to last a week. Now we have an agreement on a $1T spending bill that will keep our Government open until October 1. It's once again not based upon a comprehensive budget and reform but rather, arm twisting and an extension based on political expediency and not fundamentals.

Domestically, we may see the Republicans make another run at health care reform.

French elections are fast approaching as May 7th is right around the corner and North Korea says it will continue to conduct Atomic tests.

At 11:00AM, we see the 10yr has increased back above 2.30% to 2.33%, while MBSs have been losing ground and are at a negative 17BPS. This is a fairly big week and a lot of opportunity for volatility, both economic and geopolitical. I will be paying close attention to Friday's jobs numbers which has the largest potential for volatility.