The markets and mortgage rates, too, have been on a seesaw ride of volatility as high-impact economic data and geopolitical events in Israel have increased uncertainty about the economy and the Fed’s next move. Let’s break it down…
As you know, last week, we saw a parade of employment reports come out, which can often cause markets to move. The JOLTS report that shows how many jobs are available moved much higher than expected, and mortgage rates spiked as a result of fears that the job market remains too tight and the Fed will have to hike rates longer than traders thought.
The ADP report on private sector job creation came out the following day showing a much cooler job picture, that half of the expected new private sector jobs were created. This news, along with other weaker-than-expected numbers, sent oil prices much lower. On that day, rates improved, thanks to tempered inflation fears and lower oil prices.
There’s also the issue of our government’s use of more debt to fund itself than expected. Increasing the debt load led to a downgrade the Fitch Rating Agency cited as “fiscal deterioration,” which caused interest rates across the board to go up as well.
Then finally, on Friday, we got a look at the latest job numbers compiled by the government, and they blew predictions out of the water with new job creation numbers coming in at 336,000 when only 170,000 were expected. As a result, the 10-year Treasury yield – which mortgage rates often follow – spiked higher but recovered some in the afternoon.
As for this week, we could see volatility remain as there will be the release of two of the most important inflation reports tracking consumer and wholesale prices. Plus, it’s a holiday-shortened week, thanks to the observance of Columbus Day / Indigenous Peoples Day.
First up is the report on wholesale prices. Producer prices in September were already expected to rise 0.3 percent on the month versus a 0.7 percent increase in August, but rose .05 percent, almost double the expected increase. The annual rate in September was predicted at 1.7 percent versus August’s 1.6 percent increase, but that also came in higher at 2.2 percent.
However, despite the higher-than-expected inflation numbers, bond prices, which affect mortgage rates, continued gaining, and that can help mortgage rates improve.
Finally, the report on consumer prices (CPI) comes out on Thursday. Core prices – excluding energy and food prices – in September are expected to hold steady at a monthly increase of 0.3 percent to match August’s 0.3 percent increase. Overall prices are also expected to rise 0.3 percent on the monthly and annual rates, at 3.7 percent.
I’ll be keeping an eye on all of it and report back. And, of course, if you are considering a purchase or refinance, please reach out to me, and let’s strategize so we can make the best plan possible for you!
