April 2nd, 2010 9:55 AM by Lehel S.
Friday's bond market has opened in negative territory after this morning's Employment report showed a sizable improvement in the labor market. The stock markets are closed today in observance of the Good Friday holiday, but the bond market will be open until noon ET. It is currently down 12/32, which will likely lead to an increase of approximately .250 of a discount point in this morning's mortgage rates. However, many lenders may be closed today due to the holiday and will need to reflect this change in Monday's pricing.
This morning's data did show a significant improvement from February's readings. But when compared to forecasts, this data should be considered favorable for bonds. The report showed that the unemployment rate remained at 9.7% as it was expected to. The number of new jobs added to the economy during March totaled 162,000. This was short of the 184,000 that was expected after adjusting for an upward revision to February's total. It sh ould be safe to assume that the market was priced for those forecasts. In addition, nearly a third of the new jobs are thought to be only temporary Census workers and not permanent positions that can be relied on in the future.
So, we saw fewer jobs added than expected and the unemployment rate remained unchanged. This should be considered good news for bonds, or at least neutral. I believe that the thin holiday trading is skewing the market's reaction to the news. Many traders are home today for the holiday, leaving a skeleton staff at the office. The weak volume magnifies any selling that does take place. The result is a larger loss in bonds than we would likely see if the stock markets were open and full trading staffs were working today. We could see this corrected in Monday's trading when stocks begin trading and traders return from the long weekend.
Next week is very light in terms of economic releases. There is very little factual data sc heduled to be posted. The major events are the minutes from the most recent FOMC meeting and a couple of Treasury auctions. Look for more details on next week's event 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.