February 1st, 2019 11:08 AM by T. Fanning
Last Updated: 2/1/19Friday's bond market has opened in negative territory following this morning's batch of highly important economic data. Stocks are reacting positively to the data, pushing the Dow higher by 186 points and the Nasdaq up 16 points. The bond market is currently down 14/32 (2.68%), which should push this morning's mortgage rates higher by approximately .125 of a discount point if comparing to Thursday's early pricing. That erases yesterday's afternoon strength that led to some lenders improving rates intraday.The first of this morning's two major releases was January's Employment report at 8:30 AM ET. This Labor Department data gave us mixed readings on the employment sector. They announced that the U.S. unemployment rate rose 0.1% last month to stand at 4.0% when that it was expected to remain at 3.9%. It also showed that 304,000 new payrolls were added to the economy during the month. The slightly higher unemployment rate is being attributed to the government shutdown, making it a non-factor. And while the payroll number greatly exceeded expectations of 160,000 new jobs, December's payroll number was revised lower by 90,000 (from 312k to 222k). January's payroll number is surprising and indicates a very strong employment sector that is bad news for mortgage rates. However, it is a little difficult to put too much weight into it when we saw a sizable revision to December's whopping number.We did get a bit of clearly favorable news for bonds in mortgage rates out of this release. That came in the average hourly earnings increase of only 0.1%. Forecasts were calling for a rise between 0.2% and 0.3%. The softer earnings number is a good sign because it should ease wage inflation concerns that have been an issue over the last several months. This reading allows us to call the report neutral for mortgage rates.The second report of the morning did not give us favorable news at all. The Institute of Supply Management (ISM) released their manufacturing index for January at 10:00 AM ET. It came in at 56.6, higher than the 53.8 that was expected and up from December's revised 54.3. The unexpected increase means that surveyed manufacturing executives were more optimistic about business conditions during the month than many had thought. Because this is a sign of manufacturing sector strength, contradicting the past several months of weakening conditions, this news is negative for mortgage rates. Bonds reacted more to this data than they did the employment news.Even the least important data of the morning gave us unfavorable results. The University of Michigan's Index of Consumer Sentiment stood at 91.2 for January, exceeding expectations of matching the preliminary reading of 90.7. The increase means surveyed consumers felt better about their own financial conditions than previously thought. Since strengthening sentiment usually means consumers are more apt to spend money that fuels economic growth, this is also bad news for bonds in mortgage rates.Next week has a couple of moderately important reports set for release in addition to a couple of Treasury auctions that certainly can influence mortgage rates. There is also a possibility of some of the previously delayed data being added to calendar. We will get December's Factory Orders data Monday morning after being delayed during the shutdown. Look for details on all of next week's events in Sunday evening's weekly preview.If I were considering financing/refinancing a home, I would....Lock if my closing were taking place within 7 days...Lock if my closing were taking place between 8 and 20 days...Float if my closing were taking place between 21 and 60 days...Float if my closing were taking place over 60 days from now...This is only my opinion of what I would do if I was financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.**http://www.hlmcolorado.com/DailyRateAdvisory
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