A quick info piece on rates. Yesterday the market moved negatively…ever so slightly but about a half discount point. But if I had to guess it was the wrong direction based on the data I am seeing today. The ADP jobs report missed pretty considerably and the January numbers were revised lower (See pic at bottom of this post). Jobs reports that miss the consensus (expectation) are negative to the stock market and positive to the bond market. If investors believe the jobs market is improving you will see the stock market improve and bond market (our mortgage rates) worsen as a general rule. If the jobs market is weak you will tend to have a weaker stock market and a stronger bond market (rates improved).
The big test is this Friday’s Government Jobs Report. This report has a heavier impact to the markets than the ADP Jobs report. If the report misses expectations then we could (and should) see rates improve. The report comes out at 8:30am on March 7. And just now the ISM Index dropped to a 4-year low showing signs the employment sector is losing ground. In short, I believe this points to a weaker economy, weaker stock market, stronger bond market and opportunity for better rates on Friday compared to where we stand today. I’ll let you know the results of the Jobs Report on Friday.
