Market Update: Strong Jobs Report Creates New Rate Volatility

The U.S. economy added 172,000 jobs in May, well above expectations of 85,000. In addition, payroll figures for March and April were revised upward by a combined 93,000 jobs.

Markets reacted immediately.

Treasury yields jumped above 4.50%, mortgage-backed securities sold off, and mortgage pricing worsened.

However, the report wasn't as strong as the headline suggests.

While payroll growth exceeded expectations, full-time employment declined by 79,000 positions while part-time employment increased by 266,000. Long-term unemployment also reached its highest level since 2021, suggesting some underlying weakness remains.

Another important factor remains oil prices and ongoing negotiations involving Iran.

Financial markets continue watching developments surrounding the Strait of Hormuz because energy prices have become a major driver of inflation expectations. A successful agreement that restores normal shipping traffic could help lower oil prices and improve the rate environment. A breakdown in negotiations could have the opposite effect.

For now, mortgage rates remain highly sensitive to both economic data and geopolitical headlines.

The biggest takeaway?

Trying to predict short-term rate movements remains extremely difficult.

Buyers should focus on affordability, monthly payment, and long-term financial goals rather than attempting to perfectly time the market.

If you'd like an updated mortgage analysis or payment comparison, let's connect.

— Mike Belfor