Friday’s bond market has opened well in negative territory following stronger than expected economic news. Stocks are reacting favorably to the data, pushing the Dow higher by 69 points and the Nasdaq up 16 points. The bond market is currently down 18/32 (1.89%), but due to strength late yesterday we should see only a slight increase in this morning’s rates if comparing to Thursday’s early pricing.
Today’s only relevant economic news was the almighty monthly Employment report that showed the U.S. unemployment rate held at 4.9% as expected and that 242,000 new jobs were added to the economy. That was the problematic number. Analysts were expecting to see only 190,000 payrolls added. That news, along with upward revisions to January’s and December’s payrolls that added 30,000 more jobs than previously thought, makes the report unfavorable for bonds and mortgage rates. It also keeps in play another Fed rate hike during one of the next couple FOMC meetings.
In a bit of good news, the report revealed a 0.1% decline in average earnings. This was well short of the 0.2% increase that was expected and eased some wage-related inflation concerns. Since that followed a sizable increase in January, there was a sigh of relief that wages weren’t in a rapid upward trend. Still, the overall impact the report has had on the bond and mortgage markets is clearly negative.
Next week has little in terms of economic data that is expected to influence mortgage rates. With exception to a couple of Treasury auctions that will be in the spotlight, we could very well see a relatively calm week for rates unless stocks make a major move or something unexpected takes place. Look for details on next week’s events in Sunday evening’s weekly preview.