I. Strong Job Numbers Push Rates Back Up
We had a stronger-than-expected jobs report from the government (BLS) today – and rates shot way up. A few observations:
- George Gammon reminded us that this is additional proof that the bond market focuses on growth and inflation expectations, rather than the supply of treasuries or the size of our deficits. A strong jobs market implies strong economic growth, which in turn fosters higher rates.
- Why investors give so much credence to these BLS reports is beyond me, given that we saw another massive downward revision to the previous report – something we’ve seen happen repeatedly over the last few years. In addition, these reports contain statistical estimates that seem less than reliable, as a visibly upset Barry Habib pointed out again today in his video commentary.
- I am relieved, though, that we saw this happen under both Mr. Biden and Mr. Trump, as it implies that we either have equal opportunity corruption or an inept BLS. 😊
- Mr. Trump’s supporters are crowing about the strength of today’s jobs report, but I didn’t hear them doing the same when the very weak (and likely more accurate) ADP jobs report came out a few days ago. 😊 This is no slight on Mr. Trump, as Mr. Biden and his supporters did the same thing. It is just a reminder that politicians gotta politic – and it is also why I don’t follow any analysts who are even remotely political or ideological. I like the pure data people like Lyn Alden, Jim Bianco, and Brent Johnson.
II. Conventional vs. Conforming Loans – What’s the Difference?
A “conventional loan” is simply any mortgage loan that is not insured by the government (like FHA, VA, and USDA loans are).
Conventional loans include jumbo, conforming, and non-QM loans. Conforming loans are simply a subset of conventional loans that “conform” to Fannie Mae and Freddie Mac guidelines.
I often hear people ask if they can get “conventional financing” when they can’t qualify for jumbo financing. But jumbo financing is “conventional.” What people mean to ask is if they can qualify for “conforming financing.”