If you’re watching mortgage rates, keep a close eye on the abundance of jobs data being released this week.
There are three key reports being released, including the all-important Employment Situation on Thursday, a day early due to the July 4th holiday.
We’ve also got the job openings report Tuesday and the ADP jobs report on Wednesday.
In other words, it’s going to be jobs, jobs, jobs for mortgage rates and the wider market over the next few days.
At the same time, we’ve still got fragility in the Middle East to consider as well thanks to a tenuous ceasefire.
Employment Data Is Always a Big Factor for Mortgage Rates
As noted, it’s a big week for jobs data, more condensed than usual due to the holiday-shortened week.
We’ve got JOLTS (job openings) on Tuesday, ADP (private payrolls) on Wednesday, and the Bureau of Labor Statistics’ Employment Situation (nonfarm payrolls) on Thursday.
And for good measure, initial jobless claims as well, which are released weekly.
So it’s going to be an action-packed week for labor, which tends to be one of the biggest drivers of mortgage rates.
The other piece is inflation, which has also been top of mind lately, largely due to the spike in oil prices.
But because of a supposed peace deal there, the pressure has been lifted to some degree.
However, we’ve already seen that peace deal breached after a series of strikes took place over the weekend.
That could continue for who knows how long, keeping upward pressure on oil prices, gas prices, and mortgage rates.
Taken together, while the jobs data is crucial to mortgage rates as always, it’s already got a little extra pressure thanks to the Iranian conflict.
Hot Jobs Data Could Act as a Pile On for Mortgage Rates
Given we’re still grappling with this new wave of oil-driven inflation, anything better-than-expected on the jobs front won’t be good for mortgage rates.
This means cool jobs data can help rates, but might be limited in its impact with the backdrop of the Middle East situation.
Conversely, if jobs data comes in hotter-than-expected, you might get even more negative impact than usual.
There’s already been a lot of chatter about rate hikes due to renewed inflation concerns.
And if labor is also running hot, it makes the case for hikes even more compelling.
It would basically reinforce the need to hike rates as opposed to cut or stand pat.
So those hoping for lower mortgage rates will want the data to come in at consensus or below.
Ultimately, these reports might be more about avoiding an upside surprise than anything else, essentially allowing investors to breathe a collective sigh of relief.
Jobs Data Might Not Help Much, But It Could Hurt
Put another way, the jobs data might not help mortgage rates much either way, but has the potential to hurt them more than usual.
You could argue we’re at a crossroads of sorts with regard to the direction of the economy. Do we overheat again or continue to normalize?
The various reports this week might provide some insights there, which can also determine if rates keep improving and head back toward early 2026 levels. Or get worse.
Long story short, you want to make it through this week unscathed on these data reports to avoid any hiccups.
Then hope the Middle East situation continues to show signs of progress, thereby allowing inflation concerns to retreat.
Assuming that all happens, we can improve upon the recent (downward) gains for the 30-year fixed, which seemed to peak around 6.75% a month ago.
It has since fallen to around 6.50%, with the possibility for more improvement if the aforementioned transpires as expected.
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