Market Update for February 1st

Friday's bond market has opened flat following the release of quite mixed economic news. The stock markets are posting very modest gains with the Dow up 22 points and the Nasdaq up 1 point. The bond market is currently up 3/32, which probably is not enough to improve this morning's mortgage rates.

The Labor Department reported early this morning that the U.S. unemployment rate slipped to 4.9% last month and that 17,000 jobs were lost during the month. The drop in the unemployment rate was not expected, so we can consider that a negative for bonds. However, the report was expected to show that 70,000 jobs were added, therefore, the 17,000 decline is good news for bonds and mortgage rates. But, I believe that an upward revision to November's payrolls of 64,000 jobs has prevented a more favorable reaction in bonds.

In another piece of good news, the average hourly earnings portion of the report rose only 0.2% when forecasts were calling for a 0.3% rise. This is good news because it eases some wage inflation concerns. Still, not enough to lead to a sizable bond rally.

The Institute of Supply Management (ISM) posted their manufacturing index late this morning, saying that the index rose to 50.7. Not only was the higher than expected reading bad news for bonds, but the fact that it rose above the benchmark 5 0.0 also hurt. A reading above that benchmark means more surveyed manufacturers felt business improved than those who said that it had not. The sub-50.0 level is a recessionary indicator and was considered good news for bonds and mortgage rates for the short time it was there.

The last report of the week was the revised reading to the University of Michigan's Index of Consumer Sentiment. It was revised higher from the preliminary reading of 48.4 to stand at 50.7. This was the least important of today's three releases and has not had much of an impact on trading or mortgage pricing.

Next week is fairly light in terms of economic reports for the markets to digest, especially when compared to this week's calendar. December's Factory Orders will kick the week off Monday morning, but it is considered to be of moderate importance to the markets. Look for more details on next week's event sin Sunday's weekly preview.

If I were considering financing/refina ncing 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.