January 6th, 2017 8:52 AM by T. Fanning
Last Updated: 1/6/17Friday's bond market has opened in negative territory following mixed results in today's major economic release. Stocks are pretty calm during early trading, showing minor gains in the major indexes. The Dow is currently up 8 points while the Nasdaq has gained 19 points. The bond market is currently down 15/32 (2.40%), but due to a rally in bonds late yesterday, we still should see an improvement of approximately .125 of a discount point in this morning's pricing if comparing to Thursday's early rates.Today's big news was December's Employment report at 8:30 AM ET. It showed that the U.S. unemployment rate rose 0.1% to 4.7% as expected. There were 156,000 new jobs added to the economy last month, falling short of the 175,000 that was forecasted. These two readings actually are favorable for bonds and mortgage rates as the unemployment rate matched forecasts and the softer than predicted payroll number means the employment sector was not as strong as thought.The bad news came in the average earnings reading that again showed an increase that exceeded expectations of 0.3%. The 0.4% rise in earnings fuels concern over wage inflation that can easily affect the economy on a wider scale, making it bad news for bonds and mortgage rates. This was mentioned previously here, warning that it would become an issue if future reports showed similar results. I strongly believe we will hear more on this topic in the immediate future and it could have a negative impact on the bond market.November's Factory Orders report was also posted this morning, showing a 2.4% decline in new orders for both durable and non-durable goods at U.S. factories. This was fairly close to forecasts of a 2.1% drop in orders, so has had no impact on today's bond trading or mortgage pricing.Next week has only a few economic reports that we need to watch, but two of them are very important to the bond and mortgage markets. All the week's data comes late in the week. Mid-week we have a couple of Treasury auctions that will come into play in addition to some Fed member speaking engagements. Monday has nothing of importance scheduled. 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...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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