Rates Drop Despite Big Job Number
Under normal circumstances, a big positive job number like the one we saw on Friday, would have sent mortgage rates upward. Due to its effect on expectations for future inflation, stronger than expected employment data generally is viewed as bad for mortgage rates. After the release of the data on Friday, however, the expected reaction was not seen. One reason is that Brexit related demand from global investors for safer assets remains high. Added demand for government guaranteed U.S. bonds, including mortgage-backed securities (MBS), has helped push mortgage rates near record lows.
In May, the economy added just 11,000 jobs, the lowest level since September 2010. The June report released on Friday reminded investors not to read too much into the results for just one month. Against a consensus forecast of 180,000, the economy added 287,000 jobs in June, the highest level since October 2015.
Factors: A packed Friday will include reports on retail sales, CPI, industrial production, and consumer sentiment. Consumer spending accounts for about 70% of economic output in the U.S., and the retail sales data is a key indicator. The Consumer Price Index (CPI) is a widely followed monthly inflation report which looks at the price change for goods and services which are sold to consumers.
For specific mortgage rates, contact a Tradition Mortgage loan officer. Check back next week for more mortgage industry updates!