Last week’s ‘bad’ news is good news for mortgage borrowers as we saw a nice improvement in rates. The weekly survey of average mortgage rate published by Freddie Mac showed rates breaking their momentum higher following worse than expected news from a leading indicator in the job market, inflation, and consumer confidence.
The JOLTS report, considered a forward look at the job market in the months to come, showed the amount of new job openings shrinking to the lowest levels since March 2021. This is noteworthy because the Fed wants to see the hot labor market cool down, which will help curb wage inflation. The report showed that fewer people are quitting, and available jobs are less plentiful. And less pressure on businesses to raise wages means there’s less upward pressure on prices and inflation. And with less inflation, the Fed can slow down its interest rate hikes, which often results in mortgage rate rises slowing
We also saw the latest report on consumer confidence showing a decline and pessimism growing about households’ financial situations. Also, the Fed’s favorite gauge of inflation, the PCE Index edging higher from June to July.
All of these factors combined together to help mortgage rates improve going into the long, Labor Day Weekend.
As for Friday’s Jobs Report, a moderating but still solid 170,000 rise was expected but new job creation beat expectations, even as we saw the unemployment rate rise to 3.8 percent as more Americans re-enter the job force and look for jobs. Average hourly earnings (aka, wage inflation) in August are expected to rise 0.3 percent and actually only went up a more modest 0.2 percent, leaving the annual rate slightly lower, rising 4.3 percent.
Now, we’re back in business, summer is unofficially over, and we have a relatively quiet, holiday shortened week in progress.
The Fed’s Beige Book report comes out on Wednesday, providing anecdotal economic reports from the various Fed regions. Also that day, a Global PMI report on the health of the global economy comes out, and it could be a market mover as recent data points to a global economic slowdown. This could also offer fertile ground for mortgage rates to improve. We’ll have to wait and see!
