Risks of volatility in mortgage rates will increase tomorrow

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Mortgage rates we above And again today, as several lenders made additional upward adjustments in the middle of the day in response to bond market volatility. The prices / yields of certain bonds are major building blocks for lenders as they determine where to set mortgage rates each day.

Bonds react to a variety of factors, with the broad notion of “economy” being one of the perennial favorites. Traders track changes in economic outlook through various reports that are published at regular intervals. None of these reports are remotely at the same stage as the Employment Situation (or simply, the Job Report). It is due out tomorrow at 8:30 am ET.

At the risk of stating the obvious, if the payroll is much higher than expected, interest rates are likely to experience upward pressure, and vice versa. Economists expect this number to be 650,000. Incidentally, the same forecast was for the morning employment report from ADP (which is an attempt by the private sector to predict the number of wages in the government a few days in advance). Actual ADP number? 978k. Of course, there are several examples of ADP inaccurately predicting job growth in the Big Jobs report, but at least it’s a proof of concept that large deviations from consensus are occurring. If tomorrow’s jobs are as big as the churn, it will be hard for rates to avoid another hike.

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