In the bigger picture, the past two and a half weeks have been marked by a very narrow range in the bond market. Because bonds dictate mortgage rates, the latter have also been in a narrow range with average top tier 30yr fixed rates of 6.15-6.20%.  Yesterday's employment-related data helped bonds improve. Many lenders made mid-day improvements to mortgage rates yesterday, but there was enough of a tailwind that the average lender was lower again this morning--now in line with the lower boundary of the recent range. Next Wednesday's labor market data is a higher stakes event--one that could either bring rates back to the multi-year lows seen in January or push them up to the highest levels since December.

Mortgage rates are driven by bonds and that bonds care about employment data. There are quite a few different economic reports that focus on various employment metrics. Next Wednesday's jobs report is the biggest ticket by far, but other reports can move the needle at times--especially when they fall far from forecasts or previous readings. This was the case with three separate reports today.  One of them almost never gets covered in the news, but it showed planned layoffs at large firms were the third highest since 2020. The second was the weekly jobless claims report, which finally ticked up to slightly higher levels after coming in lower than average over the past few weeks. Garnering the biggest reaction was the Job Openings data for December, which showed the lowest levels since September 2020--much lower than forecast for today. The bond market was surprisingly willing to respond.  There was even a noticeable shift in Fed rate cut expectations (not that this should be confused for anything that impacts mortgage rates!).  The average lender moved back to the lowest levels of the week after spending the last 2 days at 2-week highs.  Caveat: the 2 week range is very narrow (6.15-6.20). [thirtyyearmortgagerates]

The average top tier 30yr fixed mortgage rate hit its highest levels in 2 weeks yesterday. The caveat was that the range has been very narrow during these 2 weeks. As such, by remaining unchanged versus yesterday, today's rates are part of the same narrow range (6.15-6.20% for MND's index). There were two relevant economic reports this morning as well as an update from the Treasury department regarding borrowing expectations. The latter is important for interest rates because the level of Treasury issuance is a primary ingredient in determining almost any consumer lending rate in the U.S. Higher issuance would increase the supply of bonds.  Higher bond supply would decrease the price of bonds. And when bond prices fall, rates move higher, all else equal. This morning's update kept issuance unchanged in the short term, but noted the probability of increased issuance in the next fiscal year.  This put some upward pressure on rates early in the day, but a tame report on the services sector helped bonds find their footing. Flat bonds = flat rates. The end.

The bad news: mortgage rates moved up to their highest levels in 2 weeks today.  The good news: the rate range has been very narrow during that time, so there's not too much of a difference between 2-week highs (6.20%) and lows (6.15%).  Today's move wasn't a product of anything that happened today. Rather, the culprit was the focal point of our coverage yesterday. Specifically, an economic report on the manufacturing sector was exceptionally strong yesterday. The result was a weaker bond market and, thus, an implication for higher rates. But the report came out after most mortgage lenders had published rates for the day and the average lender didn't see quite enough weakness in bonds to justify a mid-day rate change yesterday. Instead, they simply waited until this morning to make the expected changes.

Weakness in the bond market generally means higher mortgage rates. Today was no exception. A key economic report on the manufacturing sector was much stronger than expected. Bonds lost ground as a result and mortgage lenders were forced to set rates higher than Friday's latest levels. But the caveat is that the average lender was only marginally higher. The level of movement in the bond market suggested a bigger change. In other words, mortgage rates fared a bit better than the market suggested. When this happens, it's most frequently due to timing. If bonds lose ground moderately, but those losses happen  after mortgage lenders announce the day's rates, many lenders will simply wait until the following day to adjust rates accordingly. This could explain some of today's resilience.