Mortgage rates were higher back today with multiple lenders making additional upward adjustments in response to the bond market volatility at lunchtime. The price / yield of certain bonds are the most important building blocks for lenders as they determine where mortgage rates are set on a daily basis.
Bonds respond to a variety of inputs, with the general term “the economy” being one of the long-running hits. Traders follow changes in the economic outlook through various reports that are published on a regular basis. None of these reports are remotely on par with the employment situation (or simply “the job report”). It’s scheduled to come out tomorrow at 8:30 a.m. ET.
At the risk of saying the obvious, if the number of employees is much higher than expected, interest rates are more likely to be under upward pressure and vice versa. Economists assume 650,000. Incidentally, that was the same forecast for this morning’s ADP employment report (an attempt by the private sector to predict the government’s payroll a few days in advance). The actual ADP number? 978k. Granted, there are several examples of ADP inaccurately predicting payroll increases in the Large Jobs report, but if nothing else, it is evidence of the concept that large deviations from consensus are at play. If the number of jobs of tomorrow is so great, it would be difficult to avoid further growth.