Mortgage rates were already at 6 month highs earlier this week so it didn't take much of a push to send them up to new 7 month highs today. The push in question came from today's hotly-anticipated jobs report. No other economic report has as much consistent potential to cause volatility for interest rates.  As such, when today's job creation headline came in at much higher levels than expected, it was an easy decision for traders to push rates to higher levels. The average top tier 30yr fixed rate was closer to 7.125% yesterday. After today's route, that rate is now almost perfectly centered on the 7.25% level (mortgage rates are typically offered in 0.125% increments). These are the highest levels since May 2024. From here, the pain could continue if next week's data sings a similar tune. While not as consistent a market mover as the jobs report, Wednesday's Consumer Price Index (CPI) is the only other economic report that's in the same league. A particularly balmy inflation reading could easily push rates up another 0.125%--possibly more.  Conversely, a sharply lower inflation reading could be worth just as much of a recovery.

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Mortgage rates are driven by movement in the bond market and bonds were on a shortened schedule today due to the federal day of mourning for Jimmy Carter.  As such, volume and volatility were in short supply. Still, overnight market movement allowed the average lender to offer a microscopic improvement versus yesterday. Tomorrow (Friday, Jan 9th) is a different story.  The big jobs report comes out at 8:30am ET. Bonds routinely react to this report more than any other scheduled monthly data.  In other words, there is much higher potential for volatility tomorrow as that reaction plays out. As always, there is no way to know which direction things will move in response to economic data until we actually have the data in hand.  As always, it's not whether the data is higher or lower than last time, but rather, how it comes in compared to the median forecast. In this case, the median forecast for job creation is 160k, much lower than last month's 227k.  If jobs were to come in under 100k, rates would likely improve.  If the number is over 200k, rates would likely rise. The unemployment rate is also a consideration.  It's expected at 4.2%. Higher is better for rates, and vice versa.

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