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Friday’s bond market has opened in positive territory following the release of this morning’s key economic data. The stock markets are mixed with the Dow up 35 points and the Nasdaq down 27 points. The bond market is currently up 12/32, which should improve this morning’s mortgage rates by approximately .250 – .375 of a discount point.
The Labor Department gave us this morning’s major economic news when they posted March’s Employment report at 8:30 AM ET. It showed that the unemployment rate remained at 6.7% last month and that 192,000 new jobs were added to the economy. The 6.7% was a little higher than the 6.6% that was forecasted and the payroll number was a little softer than the 200,000 that was expected. Both misses are favorable for the bond market and mortgage rates.
An upward revision to February’s payroll number (175k to 197k) means little change between February’s supposedly weather-skewed data and March’s number. We can take that as a bit more of good news in the data. Overall though, while we have seen a positive reaction in the bond market this morning, the data is more like neutral to the bigger picture. The 197,000 jobs in February and 192,000 last month do point towards a strengthening employment sector. An upward revision to March’s figures next month would strengthen this theory. This morning’s gains may be more of a relief rally that we didn’t get stronger numbers than some were expecting. We can enjoy this morning’s improvements but I suspect they may be short-lived.
Next week is extremely light in terms of the number of economic reports scheduled for release that have a decent chance of affecting mortgage rates. I currently show only two reports and they don’t come until Friday morning. However, we do have the minutes from the last FOMC meeting and two Treasury auctions mid-week that are known to cause changes in mortgage rates. In addition, there are a bunch of speaking engagements by current Fed members that always carry the possibility of influencing the markets and mortgage pricing. Monday’s only event is a Fed speech late morning and the topic is monetary policy and the economy. Therefore, the markets will be watching it closely.