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By G. Steven Bray
As I mentioned last week, an underwhelming jobs report could tip market sentiment in favor of lower mortgage rates, and the initial reaction to the report did just that. But a change in sentiment should have staying power, and this week’s market rebound is testing that.
The media message is the weak report may give the Federal Reserve reason to hold off raising interest rates until later in the year, but I think those reporters missed an important element of the report. While the rate of job growth slowed, the rate of wage growth increased. That’s been the missing piece of the jobs recovery, and now we’ve seen wage growth in 2 of the first 3 months of this year. I’d bet the Fed is eyeing this data point more closely than the jobs number.
I throw that out as a caution. Should economic data continue to disappoint, rates are more likely to respond to events overseas than data at home, and overseas continues to be a scary place. That’s good for low rates.
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