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Rates to rise on jobs report

By Polyana da Costa ·
Friday, March 8, 2013
Posted: 11 am ET

The economy added jobs at a faster pace in February, and the unemployment rate fell to the lowest level in four years, according to the just-released employment report by the Labor Department.

Even with the budget crisis in Washington, D.C., U.S. employers managed to add 236,000 jobs in February. That’s much better than the 160,000 jobs that economists had expected and a significant improvement from the revised 119,000 jobs created in January.  The unemployment rate inched down to 7.7 percent.

That’s great news for the economy. Not so good for mortgage rates.

The yields, or rates of return, on mortgage bonds and the 10-year Treasury note jumped immediately after the jobs report was released this morning. Mortgage rates tend to follow the same direction as those yields.

The report pushed the yield on Fannie Mae’s 30-day note to 3.22 percent from 3.13. The yield on the 10-year Treasury note jumped to an 11-month high of 2.08 percent from 1.97 percent.

Yields on these safer investments normally rise when investors feel like the economy is strong enough for them to dump safe investments to bet on riskier assets such as stock.

That’s what’s happening now. Unless investors get some sort of bad economic news in coming days, expect mortgage rates to keep rising.

Should you lock now or wait for lower rates? A bird in the hand is worth two in the bush. Rates are still near record lows. I wouldn’t take a chance.

Follow me on Twitter @Polyanad.

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