Friday’s bond market has opened initially in positive territory following a weaker than expected payroll number in this morning’s key economic report but has since slipped into negative ground. The major stock indexes are mixed after early trading indicated there would be heavier selling. The Dow is currently up 4 points while the Nasdaq is down by the same amount. The bond market is currently down 6/32 (1.76%), but due to strength late yesterday we should still see an improvement in this morning’s mortgage rates is comparing to yesterday’s early pricing.
Today’s big news was March’s Employment report at 8:30 AM ET. It showed that the unemployment rate remained at 5.00% as expected. The good news came in the payroll number that was at 160,000 new jobs. This was the smallest gain since last September and fell well short of the 207,000 that was forecasted. Minor downward revisions to February and March are worth noting also since they also help indicate the employment sector is not as strong as many had thought.
The average hourly earnings reading rose 0.3% last month and is worth mentioning. This pegged expectations but is still somewhat a point of concern because of its recent pattern. Since late last year we have seen an increase in earnings followed by a flat number and then it repeats. This is the second consecutive month of an increase, breaking that cycle and putting focus on May’s earnings number that will be posted next month. If we see another increase of the same size or stronger, fears of wage-inflation are likely to be a topic of discussion. And since any type of inflationary news is considered negative for the bond market, we will be watching related data very closely.
Overall, today’s report is good news for bonds and mortgage rates. The reaction in the bond market is a bit confusing compared to what we would have expected though. This may be partly a result of the earnings number or the fact that the benchmark 10-year Treasury Note yield is nearing its recent low point again that makes a bounce higher a possibility. Either way, with today’s move it may be worth at least considering the option of locking an interest rate if still floating and closing in the near future.
Next week brings us the release of only a couple of economic reports but most of them are considered to be highly important. There are also two Treasury auctions that are known to affect mortgage rates on their sale dates. However, everything appears to come the middle and latter days of the week with nothing set for Monday. Look for details on next week’s calendar in Sunday evening’s weekly preview.