Analysis: March Jobs Report Impact on Mortgage Rates

The March jobs report garnered significant attention as analysts awaited its impact on mortgage rates, particularly after last month’s notable rate increase following a similar report. Despite initial expectations, the 10-year yield showed only a muted response to the report, which revealed a mix of positive and negative indicators for the labor market.

One of the key highlights of the report was the Federal Reserve’s observation that the fear of wage growth spiraling out of control, a concern that has persisted for over two years, has not materialized. This, coupled with the uptick in the unemployment rate to 3.9%, suggests that while the labor market has loosened compared to its previous tightness, it is not yet in a state of decline.

A critical factor in assessing the health of the labor market is the weekly jobless claims report, which has remained stable. This stability indicates an expanding economy that has not experienced job losses, a crucial element in determining whether the economy is heading toward a recession. To this end, a recession would only be confirmed if jobless claims exceed 323,000 on a four-week moving average.

The report also provided insight into the ongoing recovery from the COVID-19 pandemic. Job openings, quit percentage, and hires data are all below pre-pandemic levels, indicating that the labor market has not fully recovered its pre-COVID-19 strength. This is a significant factor in the Federal Reserve’s decision-making process, as evidenced by its projection of three rate cuts this year.

Looking ahead, the data suggests that the labor market still has room for improvement before reaching its pre-pandemic levels of job growth. This continued recovery is likely to influence the Federal Reserve’s future decisions regarding interest rates and monetary policy.