November 6th, 2009 5:19 PM by Lehel S.
Friday's bond market has opened in positive territory following the release of weaker than expected employment figures. The stock markets are reacting relatively well to the news with the Dow up 10 points and the Nasdaq up 8 points. The bond market is currently up 8/32, which should improve this morning's mortgage rates by approximately .250 of a discount point.
The Labor Department reported this morning that the U.S. unemployment rate spiked to 10.2% last month, reaching its highest level since April 1983. Analysts were expecting to see it move slightly to 9.9%. The number of jobs lost during the month stood at 190,000, which exceeded forecasts also. However, offsetting that variance was a downward revision of 49,000 jobs lost during September.
Still, the double-digit unemployment rate has many traders questioning the ability of the economy to maintain its recent growth. The recent weakness in bonds had pushed the yield on the benchmark 10- year Note above its recent trading range. This morning's news and buying gives hope that we may be able to crack that threshold and move lower. If we do, there is a fairly decent possibility of seeing further improvements to in the immediate future. This could mean lower mortgage rates over the next week or so.
Next week is very light in terms of economic reports. There are only a couple of relevant reports scheduled and they don't come until the latter part of the week. This means that the stock markets will likely heavily influence trading and mortgage rates. If today's data continues to affect the markets next week, we will probably see further improvements in mortgage rates as the week progresses. Accordingly, a less cautious approach towards interest rates may benefit mortgage shoppers at this time, but look for more details on next week's related events in Sunday's weekly preview.
If I were considering financing/refinancing a home, I would.. .. Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.