Rates swung the opposite direction after Labor Day weekend. The 30-year fixed rate mortgage moved up 6 basis points to 2.97% while the 15-year fixed rate mortgage moved up 4 basis points to 2.41%. What would it take for rates to get back to last week’s lows? A strong performance from the bond market and sufficient demand during Treasury auction cycles.
Only 235,000 new job positions were created in August, compared to the nearly 700,000 predicted. This is significant as it’s the last and most recent employment data that the Federal Reserve has to go off of before their FOMC meeting on September 21–22. Many members intended to use the labor market as a litmus test for when to start tapering, so this report may convince them to continue their easy monetary policy for at least a little longer, which may be beneficial for rates. However, today’s employment situation may not be as easy to interpret as expected. For instance, weekly jobless claims dropped from 354,000 to 340,000 for the week ending in August 28. Additionally, National Federation of Independent Business (NFIB) data was at a 48-year high for both job compensation and open positions. In fact, average hourly earnings grew 0.6% in August and 4.3% year-over-year, indicating that employment may be cooling not from companies’ lack of trying, but from a lack of willing and qualified talent. And after CARES Act unemployment benefits expired this weekend, more candidates may be joining the job market sooner than anticipated.