A brutal employment report today bodes well for mortgage rates. Borrowers, rejoice in the bad news!
The economy added 36,000 jobs in January, according to the Labor Department. Private nonfarm employers added by 50,000 jobs, while government jobs shrank by 14,000. This is worse than expected: the consensus prediction had been an increase of around 150,000 jobs. Imagine if you expected 150 people to attend your wedding reception and only 36 showed up. You'd be bummed. That's what this employment report is like.
I didn't expect the lousy jobs report to exert upward pressure on mortgage rates. Oddly, mortgage and Treasury bond yields have gone up in the minutes since the report was released. I assume this is because traders are reacting to the unemployment rate, which went down. But the falling unemployment rate is a statistical mirage. That's not a bountiful sea on the employment horizon; just arid air.
I expect mortgage rates to remain stable today, at worst. At best, they might fall a bit, but not much. So I expect this small rise in bond yields to shift into reverse soon.
About that statistical mirage: The unemployment rate depends upon the overall U.S. population, the share of the unincarcerated population that's of working age, and the number of people who either have jobs or want jobs. At the end of 2010, the population numbers were re-estimated by the Census. From my cursory reading of the report, it appears that fewer immigrants are living here: some went home, and fewer people moved here than previously estimated. The labor force shrank, and the unemployment rate fell with it.