September 28, 2021

MP Now News

Mortgage News

Rates Defy Jobs Report (And Other Weekly Highlights)

A heat wave on the west coast this week caught national attention. Despite temperatures near 120 °, Tuesday’s house price data was even hotter as both big reports told the same story.

20210702 nl7.png

FHFA prices (nationwide) increase by a Record speed. Case Shiller’s price hike (20 major metropolitan areas) hasn’t quite returned to pre-mortgage levels.

20210702 nl6.png

How hot is too hot Depends on. Prices can’t continue this pace indefinitely, but many people said the same thing late last year, only to regret not pulling the trigger.

Some recent sales have cast doubt on buyers’ willingness to chase those prices, but now this week’s pending home sales report shows May May one of the best months on record.

20210702 nl9.png

Prices had a good weekwith most lenders being at or near their best levels at least since mid-June. 10-year government bond yields were at their best levels in months by Friday afternoon after breaking the 1.44% mark that had rejected several recent attempts.

20210702 nl1.png

That is a surprising result given the strong reading in Friday’s latest official job report. This shouldn’t come as too much of a surprise, however, as the Fed has made it clear that it wants to see what the data looks like this fall before making major decisions about its pro-interest rate policy.

In fact, the reflection of stock prices and bond yields is often the result of market bets on a friendly Fed.

20210702 nl4.png

The other way to look at it would be to consider it still a long way to go before the labor market has reached pre-Covid levels again.

20210702 nl5.png

As the data comes in later this year, bonds will to be faced with a choice double the “friendly Fed” bets or continue with the reality of rising interest rates which seemed much safer late last year. For now, the break continues.

20210702 nl3.png