Market Update: Strong Jobs Reports Push Rates Higher – but Not THAT High

Blog posted On February 06, 2024

There are a lot of headlines floating around about rate momentum towards the end of last week. Here’s what most of them sound like: last week’s employment situation crushed rates’ downward momentum. When you say it like that (which most of the media is), it sounds bad. But if you look at the bigger trend, it’s not that bad. It’s not bad for two reasons.

Here's what happened on Friday:

• The employment situation reports for January (average hourly earnings, average workweek, participation rate, unemployment rate, nonfarm payrolls, private payrolls, government payrolls, and manufacturing payrolls) were released
• Most of the reports came in with numbers that were much higher than economists’ had expected (specifically nonfarm payrolls: 353,000 vs 187,000 expected)
• The bond market, which influences rate trends, was not prepared
• Consequently, bond market was much weaker and rates saw the highest one-day jump since October 2022

In perspective, this jump wasn’t that bad. Here’s why:

1. Reason #1 – before Friday’s jump, rates saw the biggest two-day drop in over a month
2. Reason #2: these high rates on Friday were roughly in line with the previous week’s highs

Would we have preferred a week of downward trends? Of course. But last week’s upward trend doesn’t put us in the worst position, partially because it was mostly just a one-day climb.

If you have any questions about what this means, let us know.

Sources: Mortgage News Daily, Mortgage News Daily