Mortgage Rates Jump with ADP News

Mortgage rates are moving higher so far today.  Early this morning. the January ADP Private Payroll report shocked to the upside with a huge beat. It came in at 246K versus the estimated 165K. This report has been hit and miss as far as being a good leading indicator for Non-Farm Payrolls but has been trending closer as of late.

Weekly Mortgage Applications dropped as we saw a dip not only in refinances, but purchases as well.  The January national ISM Manufacturing Index was higher than expected, and with the reading coming in as expansionary, this is a robust reading. The shocker is that the internal ISM Prices Paid jumped to 69 which is certainly signaling component price inflation.

Today at 1:00 EST, we will get their Interest Rate Decision and Policy Statement. The bond market is not pricing in a rate hike now. But we do have 4 new voting members this time around so it could be interesting.

Over in the Eurozone, they held a non-monetary ECB meeting today. Also, their Markit Manufacturing PMI was in line with estimates.

Global inflation on the increase. Wage and benefit costs, the employment-cost index, rose 2.2% during 2016, the Labor Department reported yesterday. Compensation growth has stepped up from its average annual growth of 2% in 2010 through 2014. Average hourly earnings for private-sector workers, rose 2.9% in December from a year earlier. Energy is adding to the increases; consumer-price inflation was up 1.6% in December from a year earlier, a level of growth last seen in September 2014, driven higher by increased energy prices. And it is not just in the US - early signs of inflation are global.

Mortgage rates justifiably pushed a little higher this morning. The Fed's policy statement is the main market moving event left for the day. If the Fed appears to set the stage for a rate hike, then we could see another move toward higher mortgage rates with increased volatility.