The unemployment and payroll data released on Friday turned out to be the perfect news for the stock market. The numbers were very close to expectations. If the numbers had been stronger than there would have been concerns of the Fed ending its QE efforts, weaker numbers and the worry would have been of the economy not growing enough. The middle of road data helped the stock market rally and the bond market fell pushing rates higher.
We had seen rates drop both Wednesday and Thursday after the ADP info on payroll on Wednesday indicated that employment was on the weak side. On Thursday the claims for unemployment appeared to confirm that. Based on that the market expected that Friday’s number would follow the same trend. When it did not the reaction was quite strong with a great day for the stock market and a complete reversal of the rate drops of the two previous day.
The bond market has been extremely volatile lately and we are seeing rates change constantly intraday. This will probably continue this week. The markets are now looking towards the Fed meeting on June 19 to get some more guidance as to its take on the latest numbers and how it will affect the ongoing QE program.
Mortgage rates are once again up.
The 10-year US Treasury Note is at 2.18%, now above 2% for a significant time.
Credit Spread (10yr UST vs. FNMA Current Coupon) 1.39, from 1.21 last time. This is the widest we have seen this year. The current market volatility is a driving factor.
Current 30-year Fixed 4.0%. Jumbo 5/1 ARM 2.5%.
Of note, the conforming 5/1 ARM is now at 2.5%, the 7/1 at 2.875%.
I am always happy to help with any mortgage questions and/or pre-approval.