The new year decided to start with a bang!

After a two-punch strike, from the NFP employment data and the ISM Services Sector report, the bond market rallied hard as both reports provided some early comfort, that perhaps, The Fed has slayed the inflation dragon.

In this episode, I unwrap the data I just mentioned above and explain what this means for mortgage rates and the housing market.

HINT:This seems to be the beginning of a new trend lower in mortgage rates, back down to historic averages.


WARNING:Lower bond yields (rates) will likely come off the back of a market crash or recession. At the forefront of that will likely be the housing market, as the most recent bubble appears to have popped with 4-consecutive weeks of price declines.

Lower mortgage rates are great news, but not if you are unable to take advantage of them with a refinance because housing price declines have wiped out the equity you need to qualify for a lower rate and payment.


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MORE ON THIS EPISODE
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The non-farm payroll report is a monthly survey that attempts to gauge the health of the labor market.

Historically it has been one of the most widely monitored data sets by the bond market as it provides a glimpse into when the underlying economy may be likely to experience inflation or deflation in the coming months, or year.

Although it was another month of positive jobs growth, many of those new jobs were multiple job holders (people with more than one job).

More importantly, growth in wages had slowed, which was another good sign that inflation may have peaked.

Bonds do not like inflation, and therefore the bond market liked this data which resulted in a big bond rally.

IMPORTANT
Mortgage rates are mostly driven by the price of mortgage bonds, and only indirectly by what the Fed decides to do with their overnight lending rate, The Fed Funds. I discuss the important relationship between bonds and mortgage rates in this episode.


Shortly after the NFP report, the ISM Services Sector data was released.

The services sector had been “running hot” lately, adding fuel to concerns that inflation could become “anchored”.

Not only did the data miss expectations, but it was the biggest miss outside of a major recession or financial crisis.

Either inflation is merely cooling quickly, or the economy is headed for hard times.


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2022 YEAR IN REVIEW
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I recently shared my financial markets “2022 Year in Review”. You can access all five parts on my blog at http://JKUTS.com.

You can also jump right to Part 1 by clicking this link: https://jonkutsmeda.com/2022-year-in-review-part-1/


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CONNECT WITH JON
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To request a personalized mortgage consultation from Jon contact him through his website at http://JKUTS.com

You can also follow Jon on twitter at https://twitter.com/JonKutsmeda

or on Instagram at https://www.instagram.com/JonKutsmeda

and on all other social media via his handle @JonKutsmeda.

For more Mortgage Guru videos and other video content from Jon, please subscribe to his YouTube channel at https://youtube.com/@JonKutsmeda


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LEARN MORE
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Welcome to the MORTGAGE GURU PODCAST, where your host Jon Kutsmeda covers the topics that matter most to homeowners and real estate investors without the industry jargon.

Each week Jon helps you to look under the hood of the housing market to make sense of the economic factors which drive home prices and mortgage rates so you can make sound financial decisions.

To subscribe to this podcast visit https://www.MortgageGuruPodcast.com


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