Friday's bond market has opened down sharply following the release of this morning's Employment report. The stock markets are reacting favorably to the news with the Dow up 84 points and the Nasdaq up 35 points. The bond market is currently down 26/32, which will likely push this morning's mortgage rates higher by approximately .250 of a discount point. Softening the blow to this morning's rates is strength in bonds late yesterday that prevented rates from rising by another .250 of a discount point.

The Labor Department gave us this morning's news, saying that the unemployment rate rose to 4.7%, that 110,000 new jobs were added and that average earnings rose 0.4%. The earnings increase was a little higher than expected, which is bad news for bonds because it raises concerns over wage-inflation. The other two headline numbers matched or were close to forecasts.

The bond weakness and stock rally during morning trading is a result of upward revisions to previous months' payrolls numbers. What greatly contributed to the recent bond rally was an unexpected decline in new jobs during August. Today's release revealed an upward revision to a positive 89,000 new jobs during August. This caused the markets to backtrack or unwind the gains that came from the previous announcement of a loss of 4,000 jobs.

Today's data also throws the monetary policy into question again. Some analysts think that the payroll corrections allow the Fed to cut rates again at their next FOMC meeting. I find that to be fairly ironic because it was the job loss number that had many believing the Fed would need to cut rates, which they did by a half-point last month. It is my opinion, that the new payroll numbers take away the need for the Fed to cut rates in the immediate future. But, this will likely be the beginning of plenty of debate until the meeting actually adjourns on October 31st.

As I suspected, the bond market would react negatively to the employment numbers. Now that the data is behind us, we must turn our attention to next week's events. The first is Tuesday's release of the minutes from the September 18th meeting. This will give us more detail on the Fed's thought process around the rate cut they made and possibly help form opinions of what the Fed's next move will be.

The most important factual data comes late next week, with several important reports schedule to be posted. Look for more details on next week's events in Sunday's weekly preview.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

Please let me know if I can provide loan information for any of your clients. I would be happy to quickly pre-qualify them, provide loan scenarios, or help improve their credit position to obtain a lower interest rate.

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Paul Lefton