Stellar Jobs Report Has Unexpectedly Weak Effect on Mortgage Rates

Mortgage rates responded more modestly than expected to November’s stellar jobs report. Employment figures as strong as Friday’s release would normally push rates upward more strongly, but the labor market has been a bastion of strength for the economy for most of this year. So while Friday’s release exceeded consensus expectations, in many ways it merely reinforced the notion that the labor market remains on solid footing, leaving little reason for bond yields, and thus mortgage rates, to react strongly.

The other factor holding mortgage rates down is, of course, the ongoing U.S.-China trade negotiations. In the absence of any meaningful developments in the talks, investors are forced to take all relevant data and news with a grain of salt in preparation for an update to the negotiations that could come at any time. In the near term, markets will be keeping a very close eye on whether planned increases to tariffs on Chinese goods – due to take effect on Sunday – will be implemented, delayed or cancelled. A delay appears to be likely, but if the increases go through as planned mortgage rates would certainly take a sharp turn lower.