Not Much Relief For Mortgage Rates After The Jobs Report

Until a few weeks ago, it looked like we might have seen the last of 7% mortgage rates, but the last 2 weeks have been brutal. The culprit has been a collection of several scheduled economic reports that were stronger than economists expected. Generally speaking, strong economic data puts upward pressure on rates.  This is a particularly sensitive relationship at the moment because the Fed has clearly stated it will hike rates a few more times unless the economy downshifts more abruptly than it has been.  With that in mind, some of the recent data hasn’t shown any downshift at all! One solid example from this week was the business activity index in the services sector (via ISM), which rebounded massively: On the same morning, the ADP employment data proved to be a much bigger deal, coming in at 497k versus a median forecast of 228k.  Although the track record is far from perfect, ADP’s stated goal is to predict the all-important nonfarm payroll (NFP) count in the Labor Department’s big monthly jobs report.  In this week’s case, NFP was set to come out the following morning. Although NFP didn’t nearly live up to ADP’s hype, it was nonetheless solid with 209k jobs created versus forecasts calling for 225k.  Wages grew a bit faster than expected, and unemployment remained near record lows at 3.6%.   While this is good news for the economy and the labor market, bonds (which drive mortgage rates) like bad news and the news wasn’t bad enough for bonds to undo the damage done on Thursday.
Source: mortgagenewsdaily.comNew feed