Friday, May 7th
Friday’s bond market has opened well in positive territory following much weaker than expected employment numbers. Stocks are reacting positively to the news also, pushing the Dow up 118 points and the Nasdaq up 129 points. The bond market is currently up 10/32 (1.53%), which with gains late yesterday should improve this morning’s mortgage rates by approximately .250 - .375 of discount point.
10/32
Bonds
30 yr - 1.53%
118
Dow
34,667
129
NASDAQ
13,762
Trailing 90 Days - National Average
High
Positive
April’s Employment report was released at 8:30 AM ET this morning, revealing the U.S. unemployment rate stood at 6.1%, up from March’s 6.0% and higher than forecasts of 5.8%. Also, only 266,000 jobs were added back to the economy during the month, falling significantly short of the 950,000 that was expected. Both of these readings show the rebound in the sector that many had predicted is not happening yet. Those numbers are very good news for bonds and mortgage rates. They also should be a heavy burden on stocks, but we have not seen that yet.
High
Negative
There was data in the report that is concerning to bond traders. Average hourly earnings spiked 0.7% when it was predicted to remain nearly unchanged. Rising wages are a sign of wage inflation that can spread to other parts of the economy, making bonds less appealing to investors. Fortunately, the other two headline numbers appear to be having the biggest influence on this morning’s trading.
High
Unknown
Next week brings us another batch of important economic data, including two inflation indexes and a key measure of consumer spending. In addition to some moderately important data, there also will be a couple of Treasury auctions that can influence rates. Activities don’t start until mid-week, meaning we should see the most movement in rates the latter days. Look for details on all of next week’s calendar in Sunday evening’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.