November 3rd, 2023 4:08 PM by T. Fanning
TGIF,
It was nearly a record week for interest rates. Rates dropped on the positive news from this week’s Fed meeting, which decided to keep rates unchanged for now. A few employment reports also came in under what was expected, causing rates to fall even further. Next week has very little economic data scheduled for release. There are a couple of Treasury auctions that may influence bond trading and mortgage pricing, especially with such a light calendar of other events. Now that the FOMC meeting is behind us, so is the Fed's required quiet period. There are plenty public speaking engagements set for next week, including two with Fed Chairman Powell. The topics don't seem to be of direct interest to the mortgage markets, but whenever these speeches take place, traders are listening and will react to any surprises. There is nothing of importance scheduled for Monday other than a late morning speech that likely will be a non-event for mortgage rates.*
We offer Conventional, FHA, VA, USDA, Jumbo and regular construction financing. Some of our niches include: Chenoa Fund loans (100% FHA financing); Conventional, FHA and VA 1x Close Construction-Perm; 1.50% Down FHA Advantage Program; CHFA Financing; HomeStyle renovation program; and a Jumbo, 5% down program. We can also do non-traditional programs! To see a detailed list of programs, visit our website: www.homeloanmortgageco.com/mortgageprograms
Last Updated: 11/3/23
Friday's bond market has opened with strong gains again following this morning's economic news. Stocks are also showing strength with the Dow up 170 points and the Nasdaq up 115 points. The bond market is currently up 31/32 (4.53%), which should improve this morning's rates by another .375 - .625 of a discount point.
Today started with the release of October's Employment report at 8:30 AM ET. It revealed 150,000 jobs were added to the economy last month, falling short of the 180,000 that was expected. The UAW strike is believed to have contributed to the weaker jobs total. Also worth noting was September's payroll number of 336,000 that surprised everyone has been revised lower to 297,000 new payrolls. More good news came in the unemployment rate that moved up from September's 3.8% to 3.9% last month.
The third headline number we follow is average earnings figures that contribute to inflation. It gave us mixed readings to think about. October's monthly increase was predicted to be 0.3%, but today's report showed it rose only 0.2% (good news for rates). However, the bad news came in an upward revision to September's monthly reading and a higher than expected year-over-year rate for October. Higher wages fuel inflation concerns and consumer spending ability that tends to lead to higher bond yields and mortgage rates.
The Institute for Supply Management (ISM) gave us a bit of more good news with the release of their service index at 10:00 AM ET. They announced a reading of 51.8, pointing towards a slowing services sector in the economy. This was a decline from September's 53.6 and lower than the 53.0 that was expected. As another sign of slower economic activity, we can label this as favorable for mortgage rates also.
This morning's bond reaction is a bit surprising considering the details of the report. At first glance of the headlines, there are some things to cheer about. However, they aren't as good as this morning's move suggests. Striking autoworkers fill the gap between the actual payroll number and forecasts. Earnings data are heading in the right direction, but not quickly. Assistance the U.S. is expected to provide to the Middle East and Ukraine conflicts is likely going to add to our deficit, which in turn is going to require more bonds to be issued in the near future. While we should enjoy and welcome the big drop in bond yields and mortgage rates this week, it would be prudent to proceed cautiously if still floating an interest rate. Quick, sizable rallies such as this have a tendency to turn backward fairly fast.
Next week has very little economic data scheduled for release. There are a couple of Treasury auctions that may influence bond trading and mortgage pricing, especially with such a light calendar of other events. Now that the FOMC meeting is behind us, so is the Fed's required quiet period. There are plenty public speaking engagements set for next week, including two with Fed Chairman Powell. The topics don't seem to be of direct interest to the mortgage markets, but whenever these speeches take place, traders are listening and will react to any surprises. There is nothing of importance scheduled for Monday other than a late morning speech that likely will be a non-event for mortgage rates. Look for details on next week's activities 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... Lock 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.*
*https://www.homeloanmortgageco.com/DailyRateLockAdvisory
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