6th September, 24
Wild Ride on Jobs Day as Fed Speakers Steal The Show
Wild Ride on Jobs Day as Fed Speakers Steal The Show We came into jobs report day expecting some clarity on the size of the Fed's impending rate cut and in hindsight, it's abundantly clear that traders felt the same way. The only catch is that the lion's share of the clarity was reserved for a few short comments from Fed's Chris Waller. The market initially mistook those comments to suggest a 50bp cut, but swiftly reconsidered. In terms of Fed Funds Futures, the volume and volatility surrounding Waller's comments were FAR bigger than the action surrounding the jobs report earlier in the morning. Ultimately, it was a good enough day for rates with bonds holding modest gains. Econ Data / Events Nonfarm Payrolls 142k vs 160k f'cast last month revised to 89k from 114k Unemployment Rate 4.2 vs 4.2 f'cast, 4.3 prev Earnings 0.4 vs 0.3 f'cast last month revised to -0.1 from 0.2 Market Movement Recap 08:52 AM 2-way trading after jobs report with nice initial gains and now some backtracking. MBS up 2 ticks (.06) and 10yr down 2.1bps at 3.708 09:18 AM Back to unchanged in Treasuries. MBS now up only 3 ticks (.09). No reason for the reversal in terms of new info/data. 10:32 AM Back to stronger levels now with 10yr down 3bps at 3.698. MBS up 5 ticks (.16). 12:34 PM Well off the best levels now. MBS down about a quarter from highs, but still up 3 ticks (.09). 10yr down 1bp at 3.72, but up sharply from 3.646 lows. 04:31 PM Lots of back and forth, but not a lot of lasting change. 10yr down less than 1bp at 3.722. MBS up an eighth of a point
Wild Ride on Jobs Day as Fed Speakers Steal The Show
Wild Ride on Jobs Day as Fed Speakers Steal The Show We came into jobs report day expecting some clarity on the size of the Fed's impending rate cut and in hindsight, it's abundantly clear that traders felt the same way. The only catch is that the lion's share of the clarity was reserved for a few short comments from Fed's Chris Waller. The market initially mistook those comments to suggest a 50bp cut, but swiftly reconsidered. In terms of Fed Funds Futures, the volume and volatility surrounding Waller's comments were FAR bigger than the action surrounding the jobs report earlier in the morning. Ultimately, it was a good enough day for rates with bonds holding modest gains. Econ Data / Events Nonfarm Payrolls 142k vs 160k f'cast last month revised to 89k from 114k Unemployment Rate 4.2 vs 4.2 f'cast, 4.3 prev Earnings 0.4 vs 0.3 f'cast last month revised to -0.1 from 0.2 Market Movement Recap 08:52 AM 2-way trading after jobs report with nice initial gains and now some backtracking. MBS up 2 ticks (.06) and 10yr down 2.1bps at 3.708 09:18 AM Back to unchanged in Treasuries. MBS now up only 3 ticks (.09). No reason for the reversal in terms of new info/data. 10:32 AM Back to stronger levels now with 10yr down 3bps at 3.698. MBS up 5 ticks (.16). 12:34 PM Well off the best levels now. MBS down about a quarter from highs, but still up 3 ticks (.09). 10yr down 1bp at 3.72, but up sharply from 3.646 lows. 04:31 PM Lots of back and forth, but not a lot of lasting change. 10yr down less than 1bp at 3.722. MBS up an eighth of a point
6th September, 24
Mortgage Rates Drop to Lowest Levels Since April 2023
Mortgage rates have a long and storied history of making big moves on the day that the big monthly jobs report comes out. In that regard, today was fairly normal. Indeed, the jobs report came out and mortgage rates made their biggest move of the week, dropping to the lowest levels since April 2023. The biggest catch in today's case was the fact that much of the market movement came in response to comments from several Fed officials who weighed in on the prospects for the rate cut in a week and a half. Granted, the jobs report influenced those comments, but they were ultimately reduced to votes for a 0.25% vs a 0.50% rate cut (the Fed is cutting either way). To be fair, the Fed comments had a bigger impact on parts of the market that don't directly correlate with mortgage rates. That was a victory for us today. Rates would have been higher otherwise. If this seems slightly confusing, it's important to remember that the Fed Funds Rate does not move hand in hand with mortgage rates. Mortgage rates move well in advance of the Fed because mortgage rates are tied to the real-time bond market whereas the Fed only updates rates 8 times per year. Moreover, the Fed Funds Rate applies to the shortest time frames (<24 hours) whereas the average mortgage lasts around 5 years. The takeaway is that you should NOT expect mortgage rates to improve after the Fed cuts rates. Mortgage rates have ALREADY improved in anticipation of the rate cut.
Mortgage Rates Drop to Lowest Levels Since April 2023
Mortgage rates have a long and storied history of making big moves on the day that the big monthly jobs report comes out. In that regard, today was fairly normal. Indeed, the jobs report came out and mortgage rates made their biggest move of the week, dropping to the lowest levels since April 2023. The biggest catch in today's case was the fact that much of the market movement came in response to comments from several Fed officials who weighed in on the prospects for the rate cut in a week and a half. Granted, the jobs report influenced those comments, but they were ultimately reduced to votes for a 0.25% vs a 0.50% rate cut (the Fed is cutting either way). To be fair, the Fed comments had a bigger impact on parts of the market that don't directly correlate with mortgage rates. That was a victory for us today. Rates would have been higher otherwise. If this seems slightly confusing, it's important to remember that the Fed Funds Rate does not move hand in hand with mortgage rates. Mortgage rates move well in advance of the Fed because mortgage rates are tied to the real-time bond market whereas the Fed only updates rates 8 times per year. Moreover, the Fed Funds Rate applies to the shortest time frames (<24 hours) whereas the average mortgage lasts around 5 years. The takeaway is that you should NOT expect mortgage rates to improve after the Fed cuts rates. Mortgage rates have ALREADY improved in anticipation of the rate cut.
6th September, 24
Fair Lending, LOS, Warehouse Tools; The VA and NAR Commission Changes; Jobs Data Confirms Rate Direction
“The credit card company called me to report suspicious activity... I asked what kind of suspicious activity, and they said someone made a payment.” “Well, I’ve got a job and try to put my money away. But I’ve got debts that no honest man can pay. So, I drew what I had from the Central Trust…” (Ask me some time in person about meeting and chatting with many of the folks in that band.) Debt is not fun, and in fact, is quite the opposite. Take a look at this graph from the St. Louis Fed of credit card and revolving debt, moving toward $1.1 trillion. Yesterday I spent some time at a school telling Ms. Chrisman’s 7th graders about how a bank works, what a mortgage is, and how home and credit card debt work. It was educational for them, and very educational for me in terms of what they seemed most interested in and what the 12-year-olds asked the most questions about. Financial education, and thus literacy, can’t start too young. (Today’s podcast is found here and this week’s is sponsored by Stavvy. Moving real estate beyond paper documents. Stavvy is the digital platform that helps real estate professionals grow their business and ditch the paper process. Book a demo today! Hear an interview with Stavvy’s Angel Hernandez on his vision for digital transformation, and how electronic documents are helping make that a reality.) Lender and Broker Software, Services, and Loan Programs MIG achieved 100% VOIE conversion improvement with Truv. MIG boosts VOIE conversion by 100% and cuts costs by 80% with Truv. Mortgage Investors Group was facing rising costs of verification of income and employment and decided to make a change that led to 80% cost savings. Learn more.
Fair Lending, LOS, Warehouse Tools; The VA and NAR Commission Changes; Jobs Data Confirms Rate Direction
“The credit card company called me to report suspicious activity... I asked what kind of suspicious activity, and they said someone made a payment.” “Well, I’ve got a job and try to put my money away. But I’ve got debts that no honest man can pay. So, I drew what I had from the Central Trust…” (Ask me some time in person about meeting and chatting with many of the folks in that band.) Debt is not fun, and in fact, is quite the opposite. Take a look at this graph from the St. Louis Fed of credit card and revolving debt, moving toward $1.1 trillion. Yesterday I spent some time at a school telling Ms. Chrisman’s 7th graders about how a bank works, what a mortgage is, and how home and credit card debt work. It was educational for them, and very educational for me in terms of what they seemed most interested in and what the 12-year-olds asked the most questions about. Financial education, and thus literacy, can’t start too young. (Today’s podcast is found here and this week’s is sponsored by Stavvy. Moving real estate beyond paper documents. Stavvy is the digital platform that helps real estate professionals grow their business and ditch the paper process. Book a demo today! Hear an interview with Stavvy’s Angel Hernandez on his vision for digital transformation, and how electronic documents are helping make that a reality.) Lender and Broker Software, Services, and Loan Programs MIG achieved 100% VOIE conversion improvement with Truv. MIG boosts VOIE conversion by 100% and cuts costs by 80% with Truv. Mortgage Investors Group was facing rising costs of verification of income and employment and decided to make a change that led to 80% cost savings. Learn more.
6th September, 24
Jobs Report Does Nothing to Resolve Fed Rate Cut Debate
At first glance, this morning's jobs report suggested a modest but clearly-defined increase in the likelihood of a 50bp rate cut from the Fed in 2 weeks. Headline nonfarm payrolls came in at 142k vs 160k forecast. In addition, the past 2 months were revised down by a total of 144k. As of today, that leaves the 3 month average NFP at 116k, a far cry from last year's 232k or 2024's YTD 207k. In other words, it's more than just one month of jobs data that suggests a shift in the labor market. Bonds pounced on that fact at first, but trading has been extremely "2-way" since then. At one point, the AM gains were completely reversed and yields moved well into negative territory. But we're back near the best levels of the day during the 10am hour--perhaps with some credit due to heavy losses in stocks. There's more going on here than a simple resolution of heavy positioning among bond traders. There are also real-time changes in the market's expectations for the size of the Fed rate cut. Just look at the volatile swings in September's expected Fed Funds Rate! But now let's look at the same chart with enough of a y axis to show where the line would need to be in order to convey 100% likelihoods for a 25bp and 50bp rate cut. Bottom line: there's some volatility in rate cut expectations, but we're far from any meaningful resolution.
Jobs Report Does Nothing to Resolve Fed Rate Cut Debate
At first glance, this morning's jobs report suggested a modest but clearly-defined increase in the likelihood of a 50bp rate cut from the Fed in 2 weeks. Headline nonfarm payrolls came in at 142k vs 160k forecast. In addition, the past 2 months were revised down by a total of 144k. As of today, that leaves the 3 month average NFP at 116k, a far cry from last year's 232k or 2024's YTD 207k. In other words, it's more than just one month of jobs data that suggests a shift in the labor market. Bonds pounced on that fact at first, but trading has been extremely "2-way" since then. At one point, the AM gains were completely reversed and yields moved well into negative territory. But we're back near the best levels of the day during the 10am hour--perhaps with some credit due to heavy losses in stocks. There's more going on here than a simple resolution of heavy positioning among bond traders. There are also real-time changes in the market's expectations for the size of the Fed rate cut. Just look at the volatile swings in September's expected Fed Funds Rate! But now let's look at the same chart with enough of a y axis to show where the line would need to be in order to convey 100% likelihoods for a 25bp and 50bp rate cut. Bottom line: there's some volatility in rate cut expectations, but we're far from any meaningful resolution.
5th September, 24
Jobs Data Poised to Influence Size of The Upcoming Rate Cut
Jobs Data Poised to Influence Size of The Upcoming Rate Cut Thursday ended up being fairly uneventful for bonds, with the balance of data leaving us slightly better off. ADP employment had the biggest positive impact and the selling pressure created by ISM Services was ultimately unable to argue a better case. Friday's jobs report will offer a final ruling of sorts. It will decide whether the early September rate rally will continue and it will also inform the odds of a 25bp vs 50bp rate cut from the Fed in 2 weeks. The range of potential bond market reactions are only limited by the data's ability to exceed or fall short of forecasts. Potential volatility is as high as it's been since the beginning of August. Econ Data / Events ADP Employment 99k vs 145k f'cast, 111k prev Challenger Layoffs 75k vs 26k prev Jobless Claims 227k vs 230k f'cast 232k prev Continued Claims 1838k vs 1870k f'cast, 1860k prev ISM Services PMI 51.5 vs 51.1 f'cast, 51.4 prev ISM Prices 57.3 vs 56.0 f'cast, 57.0 prev Market Movement Recap 08:30 AM Flat overnight and stronger after ADP. 10yr down 1bp at 3.746 and MBS up 2 ticks (.06). 10:07 AM Weaker after ISM data (but still barely green on the day). MBS up 2 ticks (.06) and 10yr down 0.2bps at 3.752 10:57 AM Now decidedly weaker with MBS down 2 ticks (.06) on the day and 6 ticks (.19) from the highs. 10yr up 1.1bps at 3.767 03:34 PM back near stronger levels. MBS up 3 ticks (.09). 10yr down 2.3bps at 3.732
Jobs Data Poised to Influence Size of The Upcoming Rate Cut
Jobs Data Poised to Influence Size of The Upcoming Rate Cut Thursday ended up being fairly uneventful for bonds, with the balance of data leaving us slightly better off. ADP employment had the biggest positive impact and the selling pressure created by ISM Services was ultimately unable to argue a better case. Friday's jobs report will offer a final ruling of sorts. It will decide whether the early September rate rally will continue and it will also inform the odds of a 25bp vs 50bp rate cut from the Fed in 2 weeks. The range of potential bond market reactions are only limited by the data's ability to exceed or fall short of forecasts. Potential volatility is as high as it's been since the beginning of August. Econ Data / Events ADP Employment 99k vs 145k f'cast, 111k prev Challenger Layoffs 75k vs 26k prev Jobless Claims 227k vs 230k f'cast 232k prev Continued Claims 1838k vs 1870k f'cast, 1860k prev ISM Services PMI 51.5 vs 51.1 f'cast, 51.4 prev ISM Prices 57.3 vs 56.0 f'cast, 57.0 prev Market Movement Recap 08:30 AM Flat overnight and stronger after ADP. 10yr down 1bp at 3.746 and MBS up 2 ticks (.06). 10:07 AM Weaker after ISM data (but still barely green on the day). MBS up 2 ticks (.06) and 10yr down 0.2bps at 3.752 10:57 AM Now decidedly weaker with MBS down 2 ticks (.06) on the day and 6 ticks (.19) from the highs. 10yr up 1.1bps at 3.767 03:34 PM back near stronger levels. MBS up 3 ticks (.09). 10yr down 2.3bps at 3.732
5th September, 24
Lowest Rates in a Year and a Half. Friday Could Take Them Even Lower (Or Cause a Big Bounce)
Wouldn't it be nice if you could know what was going to happen with mortgage rates before it actually happened? Since the dawn of time in financial markets, there's someone who's willing to make a seemingly compelling prediction about the future for every person who's willing to believe such things are better than 50/50 guesses. When it comes to time frames as short as 24 hours, it's a 100% coin flip. Reason being: Friday's direction will be determined by the outcome of the Employment Situation (aka, the jobs report)--the single most important scheduled economic report on any given month. This installment is particularly important because it's in a unique position to influence the Federal Reserve's decision on the size of the rate cut that will be announced in 2 weeks. Financial markets have long since adjusted to the expected outcome of the jobs report. In other words, if jobs come in at or around 160k payrolls, that's not actionable news even though it would constitute a big improvement over last month's 114k. It's the scenarios where the payroll count is less than 100k or more than 200k where the market is more likely to go a bit wild. Under 100k would likely result in another meaningful move toward even lower rates than today's (already the lowest since April 2023). Over 200k would mean a quick return to the recent range. For better or worse, it's not out of the realm of possibility to see rates move by 0.1 to 0.2%. Contrast that to the average change over the past 2 weeks of less than 0.05%. The report will be released at 8:30am ET which is well before mortgage lenders set their rates for the day.
Lowest Rates in a Year and a Half. Friday Could Take Them Even Lower (Or Cause a Big Bounce)
Wouldn't it be nice if you could know what was going to happen with mortgage rates before it actually happened? Since the dawn of time in financial markets, there's someone who's willing to make a seemingly compelling prediction about the future for every person who's willing to believe such things are better than 50/50 guesses. When it comes to time frames as short as 24 hours, it's a 100% coin flip. Reason being: Friday's direction will be determined by the outcome of the Employment Situation (aka, the jobs report)--the single most important scheduled economic report on any given month. This installment is particularly important because it's in a unique position to influence the Federal Reserve's decision on the size of the rate cut that will be announced in 2 weeks. Financial markets have long since adjusted to the expected outcome of the jobs report. In other words, if jobs come in at or around 160k payrolls, that's not actionable news even though it would constitute a big improvement over last month's 114k. It's the scenarios where the payroll count is less than 100k or more than 200k where the market is more likely to go a bit wild. Under 100k would likely result in another meaningful move toward even lower rates than today's (already the lowest since April 2023). Over 200k would mean a quick return to the recent range. For better or worse, it's not out of the realm of possibility to see rates move by 0.1 to 0.2%. Contrast that to the average change over the past 2 weeks of less than 0.05%. The report will be released at 8:30am ET which is well before mortgage lenders set their rates for the day.
5th September, 24
Mixed Bag Making For Mixed Morning
Thursday morning had the highest concentration of economic reports so far this week with ADP, Challenger, Claims, and two flavors of Services PMI data. The early employment metrics were weak. ADP, specifically, pushed yields lower at 8:15am. Jobless Claims were neither weak nor strong and bonds were free to drift sideways to slightly stronger after that. The stronger ISM PMI data pushed bonds back in the other direction at 10am (no real reaction to S&P version). The net effect is almost perfectly unchanged trading levels heading into the PM hours.
Mixed Bag Making For Mixed Morning
Thursday morning had the highest concentration of economic reports so far this week with ADP, Challenger, Claims, and two flavors of Services PMI data. The early employment metrics were weak. ADP, specifically, pushed yields lower at 8:15am. Jobless Claims were neither weak nor strong and bonds were free to drift sideways to slightly stronger after that. The stronger ISM PMI data pushed bonds back in the other direction at 10am (no real reaction to S&P version). The net effect is almost perfectly unchanged trading levels heading into the PM hours.
5th September, 24
Product Search, Hedging, Marketing, CRM Tools; Broker Products; Title Co. Fines; Real Estate Agent Stats to Know
“If you were born in September, it's pretty safe to assume that your parents started their new year with a bang.” Are originators getting a “bang for their buck” when it comes to marketing to real estate agents? “Rob, have you heard that 20 percent of real estate agents account for 80 percent of transactions? And that most loan officers are calling on the 80 percent of real estate agents who hardly do any business?” Yes, I have. I’ve even heard worse: that 70 percent of agents don’t close any deals. I can’t verify that, but I can recommend three things. First, make sure that the time and energy you or your staff are spending is focused on courting agents who actually do transactions. Second, skim through the NAR website, as it is chockful of statistics that will help you. Third, the St. Louis Fed does a bang up job with stats, including the number of active listings… so let’s see… 900,000 listings and 1.6 million real estate agents… (Today’s podcast is found here and this week’s is sponsored by Stavvy. Moving real estate beyond paper documents. Stavvy is the digital platform that helps real estate professionals grow their business and ditch the paper process. Book a demo today! Hear an interview with Gallus Insight’s Augie Del Rio on his love for data and how his entrepreneurial spirit was cultivated from a young age in Mexico.) Lender and Broker Software, Services, and Loan Programs The best mortgage CRM is the one you'll actually use... If your CRM isn't making your life easier, making you more money or giving you the gift of time by automating tedious admin tasks then what's the point? Aidium Mortgage CRM is built for the loan officer and embraced by the enterprise. Why? It's got a complete Reporting Suite to measure personal and team performance over time. Does your CRM have 24/7 phone, chat, and email support? Aidium does. How about a Marketing Suite? Lead and Referral management? Pre-built email/SMS series. Start asking yourself if your CRM is actually working for you, or if it's just another valueless expense. I want to see why Top-Performers trust Aidium.
Product Search, Hedging, Marketing, CRM Tools; Broker Products; Title Co. Fines; Real Estate Agent Stats to Know
“If you were born in September, it's pretty safe to assume that your parents started their new year with a bang.” Are originators getting a “bang for their buck” when it comes to marketing to real estate agents? “Rob, have you heard that 20 percent of real estate agents account for 80 percent of transactions? And that most loan officers are calling on the 80 percent of real estate agents who hardly do any business?” Yes, I have. I’ve even heard worse: that 70 percent of agents don’t close any deals. I can’t verify that, but I can recommend three things. First, make sure that the time and energy you or your staff are spending is focused on courting agents who actually do transactions. Second, skim through the NAR website, as it is chockful of statistics that will help you. Third, the St. Louis Fed does a bang up job with stats, including the number of active listings… so let’s see… 900,000 listings and 1.6 million real estate agents… (Today’s podcast is found here and this week’s is sponsored by Stavvy. Moving real estate beyond paper documents. Stavvy is the digital platform that helps real estate professionals grow their business and ditch the paper process. Book a demo today! Hear an interview with Gallus Insight’s Augie Del Rio on his love for data and how his entrepreneurial spirit was cultivated from a young age in Mexico.) Lender and Broker Software, Services, and Loan Programs The best mortgage CRM is the one you'll actually use... If your CRM isn't making your life easier, making you more money or giving you the gift of time by automating tedious admin tasks then what's the point? Aidium Mortgage CRM is built for the loan officer and embraced by the enterprise. Why? It's got a complete Reporting Suite to measure personal and team performance over time. Does your CRM have 24/7 phone, chat, and email support? Aidium does. How about a Marketing Suite? Lead and Referral management? Pre-built email/SMS series. Start asking yourself if your CRM is actually working for you, or if it's just another valueless expense. I want to see why Top-Performers trust Aidium.
4th September, 24
Persistent Rally After Data. More Data Ahead
Persistent Rally After Data. More Data Ahead Wednesday ended up being almost exclusively about the Job Openings data in the morning. Bonds were fairly flat before that and rallied sharply afterward. Once the initial reaction ran its course (in mere minutes), the rest of the day was an uneventful drift in a rate-friendly direction. Yields hit the 3pm close several bps under the 3.80% technical level in 10s, which makes this a bit of a "lead-off" to whatever extent you were planning on the 3.8-4.0 range remaining intact until Friday's jobs report. In other news, the yield curve uninverted at times--a fact that means nothing about the future even though you'll certainly see claims to the contrary. Econ Data / Events Job Openings 7.673m vs 8.100m f'cast last mo revised to 7.91 from 8.18 Job Quits 3.277 vs 3.282m prev (lower is better for bonds) Market Movement Recap 10:08 AM modestly stronger overnight with additional gains after JOLTS data. MBS up 6 ticks and 10yr down 4.7bps at 3.785 12:44 PM Sideways near best levels. MBS up 6 ticks (.19). 10yr down 5 bps at 3.782 03:17 PM Best levels of the day with MBS up a quarter point and 10yr down 7bps at 3.763
Persistent Rally After Data. More Data Ahead
Persistent Rally After Data. More Data Ahead Wednesday ended up being almost exclusively about the Job Openings data in the morning. Bonds were fairly flat before that and rallied sharply afterward. Once the initial reaction ran its course (in mere minutes), the rest of the day was an uneventful drift in a rate-friendly direction. Yields hit the 3pm close several bps under the 3.80% technical level in 10s, which makes this a bit of a "lead-off" to whatever extent you were planning on the 3.8-4.0 range remaining intact until Friday's jobs report. In other news, the yield curve uninverted at times--a fact that means nothing about the future even though you'll certainly see claims to the contrary. Econ Data / Events Job Openings 7.673m vs 8.100m f'cast last mo revised to 7.91 from 8.18 Job Quits 3.277 vs 3.282m prev (lower is better for bonds) Market Movement Recap 10:08 AM modestly stronger overnight with additional gains after JOLTS data. MBS up 6 ticks and 10yr down 4.7bps at 3.785 12:44 PM Sideways near best levels. MBS up 6 ticks (.19). 10yr down 5 bps at 3.782 03:17 PM Best levels of the day with MBS up a quarter point and 10yr down 7bps at 3.763
4th September, 24
Mortgage Rates Near Recent Lows as Markets Wait For Jobs Report
Mortgage rates moved lower for the 2nd straight day on Wednesday with the average lender right in line with their lowest levels since August 5th. In fact, most borrowers would see little--if any difference between today's loans quotes and those from August 5th. As such, today's rates basically match the lowest in well over a year. This is made possible by a series of economic reports that have "played nice" with the notion of the Fed cutting rates by at least 0.25% at the next meeting in 2 weeks. The bond market (which includes bonds that drive daily changes in mortgage rates) is constantly adjusting to get in position for the Fed's most likely course of action. By the time the Fed actually cuts, most of the mortgage rate movement associated with that cut will have already happened. If economic data is important in determining the near-term momentum, the next two days are critical. Tomorrow's combination of Jobless Claims and the ISM Services index will set the tone early, but it will ultimately be Friday's big jobs report that provides the best chance for clarity on the Fed's rate cut plans. Weaker jobs data would increase the odds of a 0.50% rate cut, and mortgage rates would drop in anticipation. Conversely, a stronger-than-expected jobs report would solidify the case for a 0.25% cut, likely pushing mortgage rates a bit higher in the interim. There's no way to know which direction things will go in the coming days, only that there is greater potential for the move to be bigger than those seen in recent days.
Mortgage Rates Near Recent Lows as Markets Wait For Jobs Report
Mortgage rates moved lower for the 2nd straight day on Wednesday with the average lender right in line with their lowest levels since August 5th. In fact, most borrowers would see little--if any difference between today's loans quotes and those from August 5th. As such, today's rates basically match the lowest in well over a year. This is made possible by a series of economic reports that have "played nice" with the notion of the Fed cutting rates by at least 0.25% at the next meeting in 2 weeks. The bond market (which includes bonds that drive daily changes in mortgage rates) is constantly adjusting to get in position for the Fed's most likely course of action. By the time the Fed actually cuts, most of the mortgage rate movement associated with that cut will have already happened. If economic data is important in determining the near-term momentum, the next two days are critical. Tomorrow's combination of Jobless Claims and the ISM Services index will set the tone early, but it will ultimately be Friday's big jobs report that provides the best chance for clarity on the Fed's rate cut plans. Weaker jobs data would increase the odds of a 0.50% rate cut, and mortgage rates would drop in anticipation. Conversely, a stronger-than-expected jobs report would solidify the case for a 0.25% cut, likely pushing mortgage rates a bit higher in the interim. There's no way to know which direction things will go in the coming days, only that there is greater potential for the move to be bigger than those seen in recent days.