Real Estate

Mortgage rates rise on blowout jobs report

Employers added 272,000 jobs in May, well above economists’ consensus that payrolls would increase by 180,000 and an average of 232,000 over the past year.

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A surprisingly strong jobs report sent mortgage rates on a rebound Friday, erasing much of the improvement seen by homebuyers this week.

Employers added 272,000 jobs in May, compared to last year’s average of 232,000 jobs and well above economists’ consensus view that payrolls would increase by 180,000.

At 4.0 percent, the unemployment rate and the number of people out of work (6.6 million) were little changed from April, but up from 3.7 percent and 6.1 million a year earlier, the U.S. Bureau of Labor Statistics said. Reported.

Increase in Treasury yields

Source: Yahoo Finance.

Production on 10-year treasurya Barometer As for mortgage rates, they rose 15 basis points to 4.43 percent on Friday, erasing much of this week’s decline. A basis point is one-hundredth of a percentage point.

gave CME FedWatch Toolwhich tracks futures markets to gauge the odds of the Federal Reserve’s next moves, showed that most mortgage-funding investors are less confident about a Fed rate cut in September.

On Thursday, investors were pricing in a 69 percent chance of one or more Fed rate cuts by Sept. 18. On Friday, bets on futures markets suggested the odds of a September rate cut had fallen to 54 percent.

Prior to Friday’s jobs report, mortgage rates were at six-day lows following a series of data releases beginning May 30 that seemed to point to an economic slowdown and an impending Fed rate cut.

Mortgage rates are going down.

Mortgage rate locks tracked by OptimalBlue showed the average 30-year fixed-rate mortgage at 6.88 percent on Thursday, down 39 basis points from the 2024 high of 7.27 percent registered on April 25.

Best Blue Data lags one day, but an index is compiled. Mortgage News Daily Rates on 30-year fixed-rate mortgages rose 12 basis points on Friday, in line with the 10-year Treasury yield.

Economists at Pantheon Macroeconomics, who still expect the Fed to cut short-term rates by 1.25 percentage points this year, said payroll surprises are revised down and most indicators point to a summer slowdown. point to

Ian Shepherdson

“These numbers eliminate any lingering prospect of the Fed cutting interest rates in July, but our underlying case is that much weaker Prints are forthcoming, enabling relaxation in September.” .

Shepherdson noted that the response rate to the payroll survey from private employers was only 64 percent, down from an average of 71 percent over the past decade. Small businesses feeling the most pressure from higher rates are responding late to the survey, he theorized, which would explain why early estimates are often revised.

Shepherdson predicted that Federal Reserve policymakers “will leave interest rates at their current high levels for a few more months. But when the labor market turns around, the Fed will be much more cautious and less visible.” Accordingly, we will continue to seek 125 basis points of easing this year, with 25 basis points. [cut] in September, followed by 50 basis points each in the November and December meetings.

The CME FedWatch tool shows that this is unlikely to happen in futures markets. Positions taken by investors on Friday put the odds of an easing of at least 50 basis points by the end of the year at 50 percent, down from 68 percent on Thursday.

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