Hotter than expected jobs and continued tension in Middle East push rates back up

Travis Chapman
Jun 5
2 min read

Happy Friday from Local Mortgage!

Rising oil pricing and a strong employment report pushed rates back up a bit this week. We will end the week back at 6.375% for our very best 30-year fixed Conventional scenario.

Oil prices moved up mid-week on news of Iranian missile strikes on various U.S. and allied targets. Mortgage rates moved in concert Tuesday and Wednesday and made a small comeback on Thursday ahead of Friday’s key employment report.

May’s employment report showed that the economy added 172,000 jobs in May, well above the consensus forecast of 93,000. Hiring was particularly strong in leisure and hospitality, local government, and healthcare.

Wage growth remained moderate, with average hourly earnings increasing 0.3% for the month, in line with forecasts. On an annual basis, wages rose 3.4%, down from 3.6% the previous month and marking the slowest pace of growth since May 2021. This is below the current inflation rate. The unemployment rate was unchanged at 4.3%, as expected.

The latest JOLTS (job openings and labor turnover rates) report, covering the month of April, was unexpectedly strong. At the end of December, there were 7.6 million job openings, far above the consensus forecast of 6.9 million and the most since May 2024. More openings suggest that companies face greater pressure to raise wages to hire enough workers, signaling strength in the labor market. This makes Fed officials more reluctant to loosen monetary policy by lowering the federal funds rate.

Looking ahead, attention will remain fixed on the conflict in the Middle East. Investors also will monitor comments from Fed officials about future monetary policy. For economic data, Existing Home Sales will come out on Tuesday. The Consumer Price Index (CPI), a widely followed monthly inflation indicator that looks at the price changes for a broad range of goods and services, will be released on Wednesday.

Hope everyone has a great weekend and thank you for reading.