![Mortgage Investors Group in [Dynamic1]](../assets/images/mortgage-investors-group.svg)
Market Comment
Mortgage bond prices finished the week near unchanged after considerable volatility. Back and forth trading continued around daily tariff developments. Rates improved Monday, languished mid-week, and worsened Friday to keep rates in check. The data was mixed but some of the employment data showed strength. FHFA Housing rose 0.1% vs 0.3%. Consumer confidence was 86 vs 87.5. ADP employment was 62K vs 115K. GDP fell 0.3% vs the expected 0.3% increase. Employment cost index rose 0.9% as expected. Income rose 0.5% vs 0.4%. Spending rose 0.7% vs 0.5%. Core PCE was unchanged vs up 0.1%. Mortgage interest rates finished the week with discount points relatively flat.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
|---|---|---|---|
| 3-year Treasury Note Auction | Monday, May 5, 1:15 pm, et | None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Trade Data | Tuesday, May 6, 8:30 am, et | $129B deficit | Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates. |
| 10-year Treasury Note Auction | Tuesday, May 6, 1:15 pm, et | None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Fed Meeting Adjourns | Wednesday, May 7, 2:15 pm, et | No rate changes | Important. Few expect the Fed to change rates, but some volatility may surround the adjournment of this meeting. |
| Weekly Jobless Claims | Thursday, May 8, 8:30 am, et | 235K | Important. An indication of employment. Higher claims may result in lower rates. |
| 30-year Treasury Bond Auction | Thursday, May 8, 1:15 pm, et | None | Important. Bonds will be auctioned. Strong demand may lead to lower mortgage rates. |
Employment Results
The U.S. Bureau of Labor Statistics released the monthly employment report last Friday. The BLS stated, “Total nonfarm payroll employment increased by 177,000 in April, and the unemployment rate was unchanged at 4.2 percent.” Analysts expected payrolls to increase by 130,000 and the unemployment rate at 4.2%. The report also noted, “Employment continued to trend up in health care, transportation and warehousing, financial activities, and social assistance. Federal government employment declined.” This was not a surprise as the new U.S. Administration has explicitly stated they intend to reduce the size of the U.S. Federal workforce. The average hourly earnings component increased 0.2% vs the expected 0.3% increase.
The current employment report plays a significant role in shaping the Federal Reserve’s future rate cut policy, as it provides critical insights into the health of the labor market. The Fed closely monitors employment data, such as nonfarm payrolls, the unemployment rate, wage growth, and other labor market indicators, to assess whether the economy needs monetary policy adjustments, like rate cuts, to support growth. Mortgage interest rates worsened in response to the stronger than expected payrolls component of the release. The data supports the idea the Fed can delay rate cuts until later in the year.
