Mortgage rates moved decisively lower today following a much weaker-than-expected reading on new job creation in a key report from the Department of Labor.  The payroll count in the big jobs report fell to 75k in May compared to a median forecast of 185k.  The previous two months were also revised moderately lower.

Taken together the update on jobs calls into question the strongest and most resilient component of the current economic expansion in the US.  This is important for two reasons.  First, a strong economy is better able to support higher rates (more people working = more people able to make higher payments).  Second, one of the Fed's mandates is "full employment."  If this drop in the job count precedes an increase in unemployment, it adds to the already growing case for a Fed rate cut this summer.

While the Fed doesn't set 30yr fixed mortgage rates, Fed rate hike/cut expectations definitely correlate quite well with movement in longer term rates like 10yr Treasury yields and mortgages.  Markets think the Fed stands a very good chance to cut rates by July--a viewpoint that has just come into full focus this week.  As it has, rates have dropped at their best pace of the year to the lowest levels since September 2017.