The situation isn't as bad as you thought. That's the message today's jobs report sends to investors who had braced for more bad news this morning.
The employment report turned out better than economists expected. The U.S. economy added about 117,000 new jobs in July, well above the 46,000 jobs added in June. Economists had expected 75,000 new jobs this month. The unemployment rate also inched down to 9.1 percent, from 9.2 percent.
That's good news for the economy and the stock market, which plummeted Thursday. But not so good news for borrowers.
If mortgage rates follow logic today --sometimes they don't --mortgage rates will rise.
Rates dropped drastically this week as investors feared the United States was headed into a second recession. Investors remain concerned about the debt crisis in Europe, which has deepened in recent days. But the encouraging job figures should help calm some investors who were pulling money out of the stock market and investing in mortgage bonds and U.S. Treasury notes.
The yield on the 10-year Treasury opened at 2.46 percent this morning, down 53 basis points compared to where it was last Friday.
Yields on Freddie Mac mortgage bonds also plunged this week. Last Friday, it was 4.05 percent. Yesterday, it reached 3.76 percent. But this morning, it's at 3.86 percent, up 10 basis points. The jobs report should help push yields up today. Normally, that means higher mortgage rates. But that's not always the case. We'll see what happens.
I'll keep you posted if you follow me on Twitter @Polyanad