April 8th Weekend Recap

Hey there, Andrew Marlow here with Mortgages by Marlow powered by Planet Home Lending. This is the first edition of my new weekly blog posts that will be going over market news for the week regarding mortgage rates and general financial news. This week we saw a lot of different things happening. 

In the last week of March, interest rates were relatively stable as the market shifted focus from the banking sector to economic data. However, the following week saw an influx of meaningful monthly economic releases, including reports from the Institute for Supply Management (ISM) and the Employment Situation. Bonds benefited from weaker-than-expected data as a slower economy is less capable of sustaining growth and inflation. The Job Openings and Labor Turnover Survey (JOLTS) showed much lower job openings in February, adding to the sense that economic momentum is cooling off.

The big jobs report, however, showed that job creation was in line with expectations, wage growth stayed solid, and unemployment ticked down to 3.5%. As a result, the bond market quickly reversed some of the progress it had made in the wake of the week's previous data. Mortgage rates followed suit, bouncing higher with the rest of the bond market on Friday, though the bounce was not as significant.

In the bigger picture, the bond market is waiting for clarity on growth and inflation, as rates have been consolidating in a range between 6 and 7 percent. The Consumer Price Index (CPI), which will be released next week, will be another report with significant influence. If core inflation for March comes in hotter than expected, rates would be under pressure to head back up into the prevailing range. However, if inflation looks like it's shifting into a calmer gear, rates might attempt to break below that range.

Overall, the bond market is waiting for consistent messaging from economic data to settle the debate on growth and inflation, and the CPI report next week will be an important indicator.

As we move into the spring market, here's hoping that the bond market gets some clarity on these and we continue to see year over year inflation ease.