The economy shed 539,000 jobs in April, raising the 6-month total to nearly 4 million jobs lost.
And while the April data may look bad, it’s actually 10% better than what was expected.
As a result, it’s turning into a bad day to be shopping for mortgage rates.
After bottoming out early last week, conforming, 30-year fixed rate mortgages have risen in cost by as much as three-quarters of a percent. Today’s good-for-the-economy report may push costs higher still.
Now, it may seem odd to categorize 539-thousand lost jobs as “good-for-the-economy”, but it’s important to remember that on Wall Street, expectations are everything.
Investors are constantly buying and selling securities based on what they think will happen in the future. And, up until this morning, there was an expectation that 600-thousand jobs had been lost in April.
As it turns out — relative — the actual job loss data wasn’t so bad.
Now, markets are making adjustments and re-forming expectations of what’s ahead for the economy. They’re preparing for things like higher levels of consumer spending in the months ahead, and fewer home foreclosures nationwide. Both outcomes would help to spur the economy from recession.
This helps explain the stock market’s early rally, too.
For now, mortgage markets remain sensitive to whiffs of an economic recovery. In general, if there’s good news for the country, it going to be bad news for mortgage rates.
Mortgage rates are off slightly in advance of the weekend.