Mortgage rates hit 2017 lows after poor jobs report
Friday’s uninspiring May jobs report from the U.S. Bureau of Labor Statistics sent Treasury yields tumbling, and mortgage rates followed suit with their lowest figures since November 2016.
Instead of the 185,000 anticipated jobs, only 130,000 new employees appeared on non-farm payrolls, and though the unemployment rate dropped from 4.4% to 4.3%, the number was skewed because of a significant labor force reduction. Perhaps the lone bright spot was average hourly earnings, which grew by .2% as expected. Overall, this was a weak job report seemingly justifying the bond market’s more bullish behavior as of late.
Equities mostly ignored the report, however, as strong corporate earnings are providing plenty of optimism among buyers—last Thursday and Friday saw the Dow Jones, S&P 500 Index and Nasdaq close at record highs. Housing markets across the country are still sizzling in the face of low inventory, and since mortgage rates peaked in mid-March (30-yr: 4.30%, 15-yr: 3.50%), they’ve fallen steadily since and are sitting at their present yearly lows (30-yr: 3.94%, 15-yr: 3.19%).*
Though the jobs data wasn’t scintillating, it isn’t nearly enough to make the Fed rethink its decision to increase interest rates at its June 14 meeting. Federal funds futures places the probability of an interest rate hike in June at 89%, though the prospect of subsequent hikes in 2017 is now less likely than it was before the jobs report.
*FreddieMac.com, “2017 Primary mortgage market survey”