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While the Federal Reserve doesn’t directly set mortgage rates, the outlook for Fed rate hikes matters a lot. In the days and weeks of nearly every Fed announcement over the past year, the market had a very clear sense of how quickly the Fed would hike as well as the general level at which the hike would likely take place.
The same thing happened in the next meeting as well. There was virtually no doubt that the Fed would continue to hike by 0.25%. But several big ticket economic reports caused traders to reconsider the outlook. In fact, even Fed Chair Powell acknowledged that no decision has been made yet and that things could change after the jobs report and next week’s inflation data.
This makes Friday’s jobs report incredibly important for rate momentum in the short term. Data will be released at 8:30 AM ET. If it’s stronger than expected, mortgage rates are likely to rise sharply. If it misses forecasts, rates should come down. Any move will be tempered by anticipation for next week’s CPI (Consumer Price Index…a key inflation report that could have as much impact).
For today, rates began to rise modestly, but most lenders offered midday improvements, leaving the average rate slightly lower than yesterday.
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