As expected, the big news last week was the Non-Farms Payroll report. What wasn’t expected, though, was the strength of the report. Mortgage rates ended the week on a large up-tick.
110,000 jobs were created in September, according to the Bureau of Labor Statistics. This exceeded Wall Street expectations by 10% and — in isolation — shows that the economy may be stronger than economists think.
But the monthly jobs report also included a major revision to August’s data, too.
Originally, the government had reported that 4,000 jobs were lost in August. In Friday’s report, though, that figure was revised to 89,000 jobs gained. Suddenly, the economy didn’t look so weak.
Investors pulled their money from the safe-haven of bonds and into the stock market in hopes of catching a higher return.
When there are more sellers than buyers of mortgage bonds, the rate of return goes up and this is why mortgage rates were higher Friday.
Friday’s revision to August’s numbers also introduced questions about the Fed and whether they lowered the Fed Funds Rate too soon. To many observers, it was August’s supposed job loss that was the catalyst for the first decrease to the FFR since 2003.
This week, there will be some good data for markets to chew on, starting with today’s release of the Fed’s minutes from their September meeting and ending with Friday’s Retail Sales report and Consumer Sentiment survey.