Just when we think that higher mortgage rates are in the bag, we receive some game-changing news. Lackluster economic data, geopolitical disruptions and comments from President Trump regarding the Fed have us wondering what will come next.
On the first Friday in April, the jobs report showed a disappointing 98,000 jobs created, far less than the 180,000 that were expected. Adding to that, the February and January jobs numbers were also revised down. The actual unemployment number came down from 4.7 to 4.5 percent, but those figures are the result of a household survey. I find the jobs-creation number to be a better indication. As bad as that may be for the economy, the news had an interest-lowering effect on the mortgage market.
On the geopolitical front, President Trump bombed Syria after its gruesome chemical attack and its own people and also decided to drop the “mother of all non-nuclear bombs” on an Isis target in Afghanistan. Whenever you have unrest in the world to the point that markets become uneasy, investors will flock to safe investments such as mortgage and treasury bonds, which has a tendency to lower rates.
Thirdly, President Trump in an interview with the Wall Street Journal in early April, surprisingly indicated that the dollar was too strong, making our exports too expensive, and that he supported a low interest rate policy. Fed Chairwoman Yellen has had a low interest rate policy in place for quite some time. During the election, he publicly said that he would not want to renew her term when it comes due in January of 2018 and now is being to rethink that comment.
Also at the time of this article, the Federal Reserve Bank of Atlanta stated that its revised number for Gross Domestic Product would come in at a measly 0.5 percent for the first quarter.
All of these points are holding back the stock market and prompting the Fed and the business community to rethink things. Could these jobs numbers be a blip on the radar, which can happen, or is this the start of a trend.
Mortgage rates today are at the lowest point that they have been in 2017: in the low 4s for a 30-year and in the mid 3s for a 15-year.
Just when we think we have it all figured out, the curveballs come at us.
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