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If you are considering locking in an interest rate for a New York mortgage or a Florida mortgage, read this post.
Thursday’s bond market opened in negative territory despite weaker than expected economic data and early stock weakness. Even though the stock markets are showing losses, they are nothing compared to yesterday’s sell-off that escalated during afternoon hours. The Dow is currently was down 42 points while the Nasdaq lost 2 points. The bond market is currently down 10/32, but we will still see an improvement of approximately .250 - .375 of a discount point from yesterday’s morning rates due to strength late yesterday.
The first of today’s three reports was the revised 1st Quarter Productivity and Costs figures that showed a 1.8% increase in worker productivity. This was a small increase from the preliminary estimate of 1.6%, making this good news for the bond market and mortgage rates.
Last week’s unemployment figures were posted by the Labor Department this morning, announcing that 422,000 new claims for unemployment benefits were filed last week. This was a small decline from the previous week, but a larger number than what analysts had expected. The higher than forecasted number of new claims also makes this data favorable since it hints at a weaker than thought employment sector.
The last report of the morning came from the Commerce Department, who said that April's Factory Orders fell 1.2%. Forecasts were calling for a decline in new orders of 1.0%, signaling a softening manufacturing sector. The larger drop in orders is good news for bonds and mortgage pricing, but the slight variance from forecasts was not enough in influence rates today.
Tomorrow's sole economic data is arguably the single most important report that we see each month. The Labor Department will post May's Employment data early tomorrow morning, giving us key employment readings such as the U.S. unemployment rate and the number of jobs added or lost during the month. Analysts are expecting to see the unemployment rate remain at 9.0% this month with approximately 169,000 jobs added to the economy during the month. A higher than expected unemployment rate and a smaller number than expected number of new payrolls would be great news for the bond market. However, stronger than expected numbers may lead to a spike in rates tomorrow morning.
One thing to keep in mind is that yesterday’s bond rally may mean that traders are expecting to see weak numbers tomorrow. This is a key economic report, so market participants would have adjusted holdings going into its release. If this is true and part of yesterday’s afternoon rally was partly due to an expectation of disappointing numbers tomorrow, it will take much weaker numbers for the bond market to rally again. In other words, simply matching current forecasts could be taken as a disappointment in the bond market, causing selling and increases to mortgage rates.
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.
Empire Home Mortgage Inc. is a registered Mortgage Broker with the NYS and Florida Banking Depts and our loans are arranged through third party providers.
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