Job market continues to heat up

___

Published Date 10/6/2017

Today's Mortgage Rate Summary

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up.

Rates Currently Trending: Neutral

Mortgage rates are moving sideways so far today with very high volatility. The MBS market worsened by -15 bps yesterday. This was enough to worsen mortgage rates or fees. The market experienced moderate voaltility yesterday.

Today's Rate Forecast: Neutral

Jobs: Its Big Jobs Friday! And what did we learn? We learned that pricing pressure in wages is very real.

Tale of the Tape:

September Non-Farm Payrolls -33K vs est of 0K.

August was revised from 156K up to 169K.

The "whisper" numbers on Wall Street were actually at -50k, so this is actually not a shock to the system, the last time that we had a major hurricane, NFP also went negative, so the markets are giving this piece of data a "pass."

Unemployment Rate dropped down to 4.2% vs est of 4.4% and might have some teeth. Recently, this number has dropped along with the participation rate. But in this case the participation rate actually increased from 62.9% to 63.1%

Wages: The MOM Average Hourly Earnings moved up by 0.5% vs est 0.3%, but the bond market focuses on the YOY reading which came in at 2.9% vs est of 2.5%. This is the highest reading since June of 2009!

Fed: Dallas Fed President Robert Kaplan (voting member) said he is still open to a rate hike in December but will take the time from now until then to decide for sure.

We will still hear from Raphael Bostic, William Dudley, and James Bullard.

Today's Potential Rate Volatility: High

Wage inflation came in hotter than expected and this is a number that the Fed pays close attention to. We've already had a very wild ride today for mortgage rates and we expect mortgage rate volatility to continue into the weekend.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

Source: TBWS

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.