Mortgage rates are modestly higher following yesterday’s sell-off of mortgage-backed bonds which is following through in this morning’s trading.
This morning’s ADP employment report (not the same report that will be released Friday) indicated that job losses for the month of November may not be as terrible as analysts had expected. The monthly report that is released a couple days prior to the Labor Department’s monthly jobs report showed that the US economy lost approximately 250,000 jobs last month. Although this is a poor reading it is not as bad as the 300,000+ that many economists were expecting. As a result, mortgage-backed bond prices are selling off.
We mentioned in Monday’s ‘rate update’ we said, “We wouldn’t be surprised to see rates move higher before moving lower.” It appears that mortgage rates are headed higher in the near-term but we remain optimistic they will reverse lower and possibly break below the levels that existed earlier this week.
Current outlook: neutral- we expect rates to move higher and then lower