Mortgage rates rose just slightly on the week, noticeably in the last couple days as key economic reports exceeded consensus expectations.
After a lingering disconnect, Treasury yields and mortgage rates have recently rekindled their relationship and resumed moving in tandem, thanks in part to enduring stability in the broader financial markets. As a result, after Treasury yields rose in recent days in response to some favorable reports on the labor market, service sector and factory orders, mortgage rates did the same. As reports continue to emerge that show the economy may be beginning a modest recovery, suddenly there appears to be upward pressure on bond yields, and thus mortgage rates. To be sure, rates remain near their lowest levels on record, but after weeks of wondering why rates weren’t even lower, the paradigm appears to be shifting.
Altogether, this results in a greater emphasis being placed on Friday’s May employment report. If the reading validates the better-than-expected private payrolls numbers released on Wednesday, then look for rates to begin moving upward in response.
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