Safe play is to lock today

The job report numbers for the month of February were released this morning.  Per the Bureau of Labor Statistics (BLS), there were 235,000 new jobs created.  This was quite a bit higher than the revised 200,000 anticipated by the market, but was lower than the ADP estimate of 298,000 that was released last Wednesday.  For many years, several investors hoped to see low levels of employment growth to maintain the Federal Reserve’s commitment to maintaining low rates and keeping stimulus dollars flowing into the market.  However, after nearly a decade of hope, such desires seem to have grown old.  Now that the economy seems confident enough to stand on its own, an economic environment that is self-sustaining is now in vogue.  If job gains are strong, people will have money to spend and the economy will continue to grow. 

A deeper look into the report shows improving health in job sectors across the board.  No longer are new job gains being fueled primarily by workers in the service industry.  We are now seeing growth throughout typically higher paying sectors as well.  This is a strong sign of health within the economy. 

Another part of the report is the Unemployment Rate, which is derived from a household survey.  This rate fell one tenth of a percent to 4.7%.  Clearly, this is a strong number and is near what the Fed considers to be full employment.  Continued growth in the workforce will be a positive sign for the economy, but will lead to higher mortgage interest rates.  At this point, higher rates will be a good thing.

Mortgage interest rates touched directly on multi-high levels and have improved slightly since.  With next week’s Fed rate hike, we will see continued volatility as we approach this event.  Locking before the day’s end is a safe play.