While the Federal Reserve does not directly set mortgage rates, its policies and actions can have a significant impact on the mortgage market. One of the most important ways in which the Fed influences mortgage rates is through its monetary policy, which includes setting the federal funds rate, the rate at which banks lend money to each other overnight. Changes in the federal funds rate can affect other interest rates, including mortgage rates.

In addition, the Fed's outlook on future rate hikes can also influence mortgage rates. If the Fed signals that it is planning to raise interest rates in the future, mortgage rates may rise in anticipation of those hikes. Conversely, if the Fed suggests that it will hold off on rate hikes, mortgage rates may remain low.

Overall, the outlook for Fed rate hikes is an important factor that can affect mortgage rates in the short term and the long term. The market closely watches the Fed's statements and actions for any indication of future rate hikes or changes in monetary policy.

As for today, rates started out modestly higher, but most lenders ended up offering mid-day improvements that brought the average rate slightly below yesterday's.

Thursday was nice, but it’s all about Friday.

It's possible that the bond market's reaction to the higher jobless claims numbers was an overreaction, but it's also true that market participants are highly sensitive to economic data releases, particularly when they have the potential to affect monetary policy decisions by the Federal Reserve. As you noted, the non-farm payrolls (NFP) report is typically one of the most closely watched economic indicators, and can have a significant impact on the bond market and other financial markets.

Investors and traders may be anticipating that the NFP report will provide further insight into the state of the labor market and the broader economy, which could in turn affect the Fed's monetary policy decisions. If the report suggests stronger-than-expected job growth and economic activity, the bond market may react by pushing up yields and mortgage rates as investors anticipate the Fed raising interest rates sooner than previously expected. Conversely, if the report is weaker than expected, bond yields and mortgage rates could fall as investors adjust their expectations for future Fed's policy.

Overall, the bond market's sensitivity to economic data releases, including jobless claims and the NFP report, reflects the importance of these indicators in shaping the outlook for the economy and monetary policy, and highlights the potential for significant market movements in response to new information.