The Job Report of All Job Reports

The Bureau of Labor Statistics (BLS) released their estimate for new jobs created in the month of March, with the headline number coming in at 916,000.  This monumental growth in the labor market can largely be attributed to more service type workers coming back to work following extended shutdowns that kept many restaurants and bars either closed or providing limited services.  In addition, a large number of educators also returned to work, along with retail and entertainment workers.  To add to the excitement of the report, last month’s number was revised higher by 89,000.  As a result of the job gains, the unemployment rate fell from 6.2% down to 6%. 

Although the damage from this morning’s update on the labor market has added upward pressure to mortgage interest rates, so far, the impact hasn’t been overwhelming.  Since it is early in the trading day, this can and likely will change.  I anticipate volatility to be elevated today, as investors continue to dig deeper into the report and digest the information as it is discovered.  Since we started the day at the top of a downward trading channel, we could certainly see bond prices fall to the bottom of the channel before the day is done.  This would put mortgage interest rate pricing back to the higher levels we saw over the past couple of weeks.  As is common after BLS report, the ride could get a little bumpy and uncomfortable. 

Given positive economic news, and continued success with Covid vaccinations, there is little hope of a sustained rally in the bond market to improve mortgage interests rates.  Our hope seems to lie with the Federal Reserve to help flatten the yield curve by selling shorter term notes and using the proceeds to purchase longer term maturity bonds (also known as “Operation Twist”).  Otherwise, plan on rates continuing to move higher. 

We will maintain a locking bias. 

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