Rates Ride Strong Data to Modest Gains Ahead of Jobs Report

Mortgage rates increased this week – for the first time in more than a month – rallying on strong economic data before stabilizing in recent days.

Thursday’s reading of fourth quarter 2018 GDP exceeded market expectations and a strong reading of the Chicago PMI – a closely watched indicator of manufacturing business activity – reached its highest level in over a year. Taken together, the releases offered evidence that the economy remains on good, if not strong, footing – prompting yields to trend higher for the better part of two days.

Since then, however, enthusiasm has tapered. Mixed messages on U.S./China trade negotiations have resulted in only mild rate fluctuations as markets await more definite signals from the meetings.

Looking ahead, the focus shifts to Friday’s all-important employment report. Wednesday’s release of private sector jobs figures came in near expectations, suggesting that job growth remains solid, despite a modest slowdown. If Friday’s report suggests the same, more upward movements in mortgage rates could be on the way.