March 6th, 2020 11:43 AM by T. Fanning
Last Updated: 3/6/20Friday's bond market has opened significantly higher as more concerns about the coronavirus and its impact on the global economy drive trading. Despite a strong Employment report, stocks are tanking again with the Dow down 490 points and the Nasdaq down 169 points. The bond market is currently up 45/32 (0.77%), but weakness late yesterday is going to limit this morning's improvement in rates to approximately .125 of a discount point from Thursday's early pricing. If you saw an upward revision to pricing yesterday afternoon, you should see more of an improvement in this morning's rates.It is not apparent by this morning's stock selling and bond rally, but we did have a major economic release that showed results that traditionally would favor stocks and cause bonds to sell. Obviously, traders are much more interested in the virus and the global economy at the moment than any economic data. As the number of coronavirus cases and deaths spread, along with the fact there is no known vaccine yet, investors are concerned the worst is yet to come. As stock holdings are sold, funds are being moved into bonds as a safe haven. That has pushed the benchmark 10-year Treasury Note yield down to levels few thought we would ever see and mortgage rates to record lows. Rates have lagged behind Treasuries in this downward spiral but are still trending lower fairly quickly.February's Employment report was today's sole economic release. It revealed that the unemployment rate slipped 0.1% to stand at 3.5% last month while 273,000 new jobs were added to the economy. The unemployment rate was expected to hold at 3.6% with new jobs totaling 170,000. In addition to February's job count, today's report showed upward revisions to January and December's payroll numbers totaling 85.000. Those figures put the average three-month payroll count to a fairly healthy 243,000 new jobs per month. Average earnings rose 0.3%, matching expectations.Overall, today's Employment report was bad news for bonds and mortgage rates. Had it not been for the coronavirus situation we likely would have seen a strong negative reaction in bonds and a stock rally. Fortunately, stocks were tanking and bonds were rallying during overnight trading, preventing the markets from having much a reaction to this report. It is worth noting though- the coverage period of this release ended just as the coronavirus was becoming the focus of the markets. Next month's release will give a better indication if the employment sector was going to be affected also.Next week has a handful of reports scheduled, but they come mid and late week. The most important ones are monthly inflation indexes. News on the coronavirus this weekend will play heavily on the markets next week also. However, at some point we will likely see bond yields bounce higher and mortgage rates move higher. It may not start Monday and may not be from current levels, but it could be sooner than some people may think. Accordingly, it would be prudent to proceed cautiously if still floating an interest rate. Look for details on next week's calendar 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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