Rates tick down on ADP job report, but rally stalls after government shutdown

Happy Friday from Local Mortgage!

It was a very interesting week with the government shutdown leaving most investors in the dark. We had a pretty good week going ahead of the anticipated employment report, putting us back very close to 5.875% for our best 30-year fixed conventional loan. Buyers have the option of paying just a bit to get 5.875% or getting a good bit of closing costs credited at 6.00%.

The ADP job report released Wednesday showed continued weakness in the labor markets, estimating a decline of 32,000 jobs in September. Data collected by private companies like ADP doesn’t typically carry the same weight as the government reports but with the government shutdown canceling Friday’s big report, mortgage bonds rallied on what became this week’s headline report.

With investors and the FED relying so heavily on current data relating to employment and inflation, this government shutdown could become very interesting as it relates to October’s FED meeting.  If it only lasts a few days, the effects of the shutdown will be minimal but if it goes weeks, not days, the impact on the next FED meeting could loom large. With the government shutdown, data collection is also at a standstill so investors and economists may have some doubts at the accuracy of October data once those numbers are eventually published. With the economy and mortgage markets at a pivotal point, a government shutdown could have more of an impact this time vs. years past. 

It was already scheduled to be a light week for economic reports, but it will be super quiet if the government remains closed.  

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