February 7th, 2020 1:31 PM by T. Fanning
Last Updated: 2/7/20Friday's bond market has opened in positive territory despite stronger than expected results from a key economic report. The major stock indexes are in selling mode even though the data appears to be stock-friendly, pushing the Dow lower by 200 points and the Nasdaq down 57 points. The bond market is currently up 18/32 (1.58%), which should improve this morning's mortgage rates by approximately .250 of a discount point.January's Employment report was today's major release. It revealed that the unemployment rate inched higher by 0.1% to stand at 3.6% last month while 225,000 new jobs were added to the economy. The unemployment rate was expected to hold at 3.5%, meaning the increase is good news for bonds and mortgage pricing. However, this headline number does not draw as much attention as it used to. Most focus these days is on the payroll number and earnings data. The payroll number was much stronger than forecasts, indicating a strong labor market that is generally bad news for mortgage rates.The earnings portion of the report was a mixed bag of results. January's average earnings rose 0.2%, falling short of the 0.3% that was expected. Weaker earnings numbers ease wage inflation concerns that make bonds less appealing to investors. But the annual rate of earnings growth was a bit stronger than previously thought. This should have been a negative for bonds.That leaves us to wonder why there is such a positive reaction in the bond market this morning. Bonds did improve a little during overnight trading, but there was a clear move higher shortly after the Employment report was posted. It can't be the earnings data nor the big payroll number. The unemployment rate is favorable, although, it doesn't carry enough importance these days to offset the increase in new jobs. Maybe after the spike in private sector jobs in Wednesday's ADP report traders were expecting stronger numbers in today's release than we actually got? Or could it be related to the coronavirus spreading? Regardless of the reasoning, it is a day of relief for mortgage rates after such a bad week.Next week has several relevant economic reports scheduled for release, two of which are considered to be very important. There are also a couple of Treasury auctions that may influence mortgage rates. All of the week's events are set for the mid and latter days, leaving stock movement and weekend news to drive bond trading and mortgage pricing the early days. Look for details on the week's complete 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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