The Bureau of Labor Statistics released their estimate of new job creations for the month of March. As expected, the reported increase was near the market’s expectations of 200,00-210,000, coming in at 215,000. When taking a deeper look into the types of jobs created, it was no surprise to see manufacturing and mining jobs decline, while construction and hospitality jobs showed strong gains. Although the Unemployment Rate increased from 4.9% up to 5.0%, it was still a strong report overall. The reason for the increase in the Unemployment Rate was due to more people entering the labor force. It was reported that 396,000 people entered the workforce. So there are fewer jobs created than there are new people looking for work.
One of the more significant aspects of the report is the Average Hourly Earnings increase. Hourly Earnings were strong, showing an increase of 0.3% for the month of March. This brings the year over year wage gains up to 2.3%. Since was increases are a leading indicator of consumer inflation, this number is of great concern to bond investors. With higher inflation being the arch enemy of the bond market, higher earnings could lead to greater fear and higher interest rates.
Although this was a strong report overall, it was still not concerning enough to ruin the party in the bond market. Bonds broke above the Fibonacci level that they battled for the entire month of March, and are now right up against high levels of 2016. This makes mortgage interest rates as attractive as they were back in February. Considering that this is happening at the same time the stock market is holding on to their recent gains, this is great news for the mortgage market.
At this point, we are going to switch to a locking bias for those looking to close in the near term. To take the risk of hoping for improvement in rates that would be below multi year lows could be more risk than most are willing to absorb. Now represents an incredible opportunity that many homeowners should be taking advantage of.