Strong Jobs Report Bumps Rates Higher – For Now

Mortgage rates rose this week following a stronger-than-expected jobs report, but are expected to come back down after Federal Reserve Chairman Jerome Powell testified that a near-term cut to the federal funds rate remains likely.

Following a lackluster report last month, Friday’s jobs figures greatly exceeded industry expectations and – at least momentarily – reduced concerns about a looming economic slowdown. The news also opened up the possibility that the Fed would take a less-aggressive approach to monetary policy than it had previously indicated, possibly waiting to cut the overnight lending rate.

But in testimony on Wednesday, Chairman Powell asserted that despite the rosy jobs figures, the Fed believes the economic outlook has not improved in recent weeks – a broad hint that the central bank still plans to reduce rates at an upcoming meeting.

As a result, mortgage rates are poised to fall in the coming days and are likely to stay near their current, multi-year lows for the immediate term.