Market Update: Rates Unchanged After a Volatile Week; More Drama Ahead This Week Could Send them Lower

Blog posted On June 03, 2024

Though last week was a short week thanks to the Memorial Day holiday, it sure felt long. Rates started off the week inching higher – partly due to the long weekend partly due to comments from some Fed members. Then, they started to trend lower toward the end of the week as a result from some rate-friendly economic data. This week holds the potential to continue the lower rate trend with the jobs reports.

Why rates started last week higher

 Reason 1: the long weekend. “It's often said that the bond market can experience elevated, seemingly random volatility amid the lighter trading participation seen on the days surrounding 3-day weekends,” said Mortgage News Daily’s Matthew Graham. “Tuesday may have been a good example as it brought the biggest move of the week despite an absence of high consequence data.”

Reason 2: one Fed member mentioned that he wanted “many” more months of good inflation data before he would consider cutting rates.

Inflation data saved the day

Later in the week, we got the revised quarterly GDP numbers, which were more rate friendly this time around. We also got the PCE inflation data from the month of April. The PCE index is the Fed’s preferred method of measuring inflation. April’s data thankfully showed that, despite January’s inflation data spike, we are still trending in the right direction.

Big news coming up this week

The drama continues this week with the jobs data. There are several reports scheduled for release:

  • Job openings and labor turnover survey (JOLTS) (Tuesday)
  • ADP nonfarm employment change (Wednesday)
  • The employment situation (Friday)

Besides inflation reports, jobs data has been one of the strongest influencers on rate trends. If the numbers come in as expected (or lower than expected), rates could trend lower this week. However, if the numbers come in hot, we could be looking at a different story for rates.

Worried about rates trending higher? Ask us about our rate lock options.


Sources: Bloomberg, Mortgage News Daily