Your Mortgage Minute 2/7

Your Mortgage Minute

• Mortgage rates experienced some fluctuation this week, starting on a positive note before reversing course due to stronger-than-expected employment data.
• Early-week optimism from tariff reductions on Mexico and Canada helped rates improve to as low as 6.99%
• Today's unemployment rate drop to 4% overshadowed the below-forecast non-farm payrolls (143K vs 169K expected), pushing rates up
• Next week's inflation reports expect to have the biggest impact on mortgage rates

Weekly Video Resource:

Monday Market Update 2/3: Impact of Weekend Tariffs on Mortgage rates

https://youtu.be/yneVoia-DcA?

Market Recap: Jobs Data and Trade Policy (2/3-2/7)?

Trade policy adjustments and employment data dominated this week's market movements. The Trump administration's decision to pause tariffs on Mexico and Canada initially improved market sentiment, leading to lower rates early in the week. However, today's jobs data showed continued labor market resilience, with December’s payroll numbers revised upward and a surprising drop in unemployment, suggesting the Fed may maintain higher rates longer than anticipated.

Labor Market Analysis

• Unemployment rate: Dropped to 4% from 4.1% (4.1% expected)
• Non-farm payrolls: 143,000 new jobs (170,000 expected)
• December revision: Updated to 307,000 from initial 256,000
• Wage growth: Up 4.1% year-over-year (3.7% expected)

Looking Ahead: Key Inflation Reports Next Week

• Wednesday: Consumer Price Index (CPI) – The most critical gauge of inflation, with significant implications for interest rates.
• Thursday: Producer Price Index (PPI) – Provides insight into inflation trends at the wholesale level.
• Friday: Retail Sales Data – A measure of consumer spending strength, which could further influence market expectations.

Market Implications

The combination of strong employment data and next week's inflation reports will be crucial for rate direction. Lower inflation readings could offset today's employment data and improve rate outlook. However, if inflation remains elevated, we may see continued upward pressure on mortgage rates.?

Within CPI, I’d expect shelter costs, still the stickiest inflation component, to drop as we replace a high January ‘24 reading. A drop of only 0.2% or less would be a disappointment, while a +0.4% decline would be great news for mortgage rate watchers.?

Want to discuss how these market movements affect your situation? Contact me directly for personalized strategies and options.