Monday Mortgage Minute – Jerome Powell & Jobs take the stage this week

As I mentioned, last week was going to be a bit light, yet there are still a few things we need to keep aware of:

Monday February 27th Pending Home Sales had a pretty low forecast of 0.9%, but came in REALLY hot at 8.1%. This is a great print on the surface, and we’re going to want to see more of this month after month in order to generate confidence that there is a trajectory change in this report through the rest of the year. And remember, this is just 1 great reading…we’ll need to string these together for a while to really make our confidence concrete.

Tuesday February 28th consumer confidence came out well below what was expected. It was 102.9, and anything over 100 is considered good. In this case the expectation was 108.5, so a 102 print isn’t that great, but not all hope is lost…quite yet.

Wednesday March 1st the ISM Manufacturing PMI came in just about as expected and made very little difference in the markets this week only because it was already struggling to begin with, and the continued struggle isn’t BREAKING NEWS. I would expect that this will gain more weight overall once this figure heads north of 50 once again, which is a sign of expansion and anything below 50 is a signal of contraction.

Thursday March 2nd unemployment was pretty much the same as the previous week, pretty low, and a non-issue EXCEPT FOR THE FACT THAT THE FED NEEDS TO SEE MORE UNEMPLOYMENT AND IT’S NOT HAPPENING!!! They’re totally going to raise rates again, especially because the labor market isn’t softening like they need it to.

Friday March 3rd the ISM Services PMI came out pretty quietly and it’s not SO VOLATILE that people are talking about it. Among all the other major headliners when it comes to the economy right now, this one is a lightweight until it becomes a REAL PROBLEM. That day could still come, but for now it may have found some footing.

This week is a BIG DEAL for a few key reasons.

#1 Jerome Powell will be testifying before the senate banking committee Tuesday March 7th and Wednesday March 8th. EVERYONE CONNECTED TO THE MARKETS AND FINANCE WILL BE LISTENING TO WHAT HE SAYS AS WE NEAR THE NEXT FED MEETING THIS MONTH. The markets will be volatile and most likely experience wild swings as tuned in ears are jockey-ing for position on what it could all mean moving forward.

If you’re listening to anything that could be a cue for what the next fed meeting will be like, listen for Jerome to say things about prices becoming “entrenched” and that their upwards trajectory for rates to sustain until they are confident their work is done. If you hear those 2 things or anything that remotely sounds like those 2 things…that confirms they’re worried inflation is here to stay.

#2 Labor and Jobs are in the spotlight Big Time! We have JOLTS, ADP Non-Farm Payroll, unemployment, and average hourly earnings all on deck to give us a very well-rounded look at how the labor markets are performing, where there are more pain points lifting up their heads, and possibly what the next shoe to drop will be.

This week is going to be a really good week for gauging the economic horizon.

So what does all this mean for mortgage rates?

Well everything I just mentioned coming up this week is going to impact mortgage rates as money moves INTO or OUT OF the mortgage backed security market. As we’ve been teaching you the more money that comes in, the lower the rates will go and the more money that leaves the market creates scarcity which causes rates to increase.

With the next fed meeting only a few weeks away, this is the week that could have the most volatile reaction between now and the next fed rate announcement. Expect rates to go up or down by as much as 0.25% or 0.3875% of a percent on any given day. Anything LESS volatile than that on a week like this will be very welcomed.

Thanks again for tuning in to Monday Mortgage Minute.

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