There's a palpable uneasiness in mortgage markets right now and Friday's payroll report looms large. Remember: it's not the actual data that matters -- it's how close the data is to its expected levels.
All week, traders have been jockeying for position based on a projected 100,000 new jobs created and if the number is not 100,000, there will be a lot of scrambling.
If the actual figure is lower, than it signals additional weakness moving forward in 2007.
Fewer workers means fewer paychecks spent on food, clothing and housing so rates should retreat on economic weakness. Consumer spending, after all, makes up 70 percent of our economy.
The reverse is true if the actual jobs figure is higher. Rates should increase in that instance.
Expect a lull in market activity until tomorrow afternoon and then be prepared for shock waves Friday morning.
This is the last set of major data before next Wednesday's FOMC meeting and it will be closely monitored by traders the world over.
