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Rates may rise on jobs report

By Polyana da Costa ·
Friday, October 7, 2011
Posted: 10 am ET

The U.S. labor market has shown signs of improvement. Employers added 103,000 jobs in September. That's substantially better than the 60,000 jobs many economists had predicted.

Good for the economy. Not so good for mortgage rates.

Revised figures for August and July also were welcome news. Instead of  the zero new jobs that had been reported for August, the U.S. Labor Department now says there were 57,000 new jobs added that month. July's report was revised from 85,000 jobs to 127,000.

That's still not good enough to say the labor market is healthy, but it keeps it out of the intensive care unit for now. A healthy economy requires at least 150,000 new jobs be added each month. That's a fraction of the 8.7 million jobs lost since the recession began. Despite the new jobs added in September, the unemployment rate remains at 9.1 percent and 14 million people are out of work.

Still, some good news is better than nothing. At least that's how investors seem to have taken the news.

Minutes after the jobs report came out this morning, the yield on 10-year Treasury bonds jumped from 1.98 percent to 2.11 percent. That happened because many investors sold their bonds to buy riskier investments.  Mortgage rates often --but not always -- follow the direction of Treasury yields. The yield on Freddie Mac bonds, another benchmark closely watched by mortgage experts, also rose from 3.53 percent to 3.58 percent.

If you were getting ready to apply for a mortgage this morning, there's no reason to panic. Rates may rise slightly today and over the next few days but it probably won't last long. Plus, rates already are so low that a slight rise won't make that much of a difference on your monthly payments.

Follow me on Twitter @Polyanad.

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1 Comment
George Raymondo
October 07, 2011 at 3:39 pm

Did you might? They have already taken a hit!