February 2nd, 2018 11:24 AM by T. Fanning
Last Updated: 2/2/18Friday's bond market has opened in negative territory following today's major economic data. We are seeing a big move in bonds despite heavy selling in stocks. The Dow is currently down 280 points while the Nasdaq has lost 76 points. The bond market is currently down 16/32 (2.84%), which should push this morning's mortgage rates higher by approximately .500 of a discount point if comparing to Thursday's morning pricing. We saw weakness late yesterday that caused widespread upward revisions to mortgage rates. This morning's losses doubled-down on the increases, creating the sizable jump in mortgage pricing.This morning's big release was January's Employment report at 8:30 AM ET. It showed that the U.S. unemployment rate held at 4.1%, as was expected. New payrolls rose 200,000, exceeding forecasts of 180,000 new jobs. Revisions to December and November's payroll figures took away 24,000 jobs from previous estimates. The variance from forecasts in January's total and the revisions to previous months are relatively minor and don't justify this morning's bond selling.What appears to be fueling part of this morning's losses was the average hourly earning's reading that rose 0.3%. While this was expected for this month's report, revisions have the annual rate over the past 12 months up to 2.9%. That is the fastest annual wage growth since 2009. Because wage growth easily spreads to other sectors of the economy, fueling inflation that makes bond less attractive, the bond market has reacted negatively to the news.December's Factory Orders data was posted at 10:00 AM ET. The Commerce Department announced a 1.7% rise for new durable and non-durable goods orders. Analysts were expecting to see a 1.3% rise, indicating manufacturing activity was stronger than expected at the end of the year. The stronger than anticipated rise makes the data bad news for bonds and mortgage rates. However, this data has had little impact on this morning's trading. Bonds were already well in negative ground before this report was released.Also released late this morning was the revised reading to the University of Michigan's Index of Consumer Sentiment for January. It came in at 95.7, beating predictions of 95.0 and up from the previous reading of 94.4. The increase means surveyed consumers felt more comfortable about their own financial situations than thought. Since rising confidence usually means consumers are more apt to spend and fuel economic growth, this was also bad news for the bond market.Next week is light in terms of relevant economic data and other events that are likely to influence mortgage rates. At this moment, it appears the biggest events of the week will be a couple of Treasury auctions mid-week. Look for details on all of 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.**http://www.hlmcolorado.com/DailyRateAdvisory
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