May 5th, 2010 10:29 AM by Lehel S.
Wednesday's bond market has opened in positive territory again following more weakness in stocks. The stock markets are extending yesterday's losses, but to a much lesser degree. The Dow is currently down 40 points and the Nasdaq down 18 points. The bond market is currently up 7/32, which should improve this morning's mortgage rates by approximately .250 - .375 of a discount point.
There is no relevant data scheduled for release today, so any afternoon revisions to mortgage rates will likely come from movements in stocks. If the stock markets move into positive territory, we may see bonds fall and mortgage rates move higher. If the major stock indexes move lower, afternoon improvements to rates may follow.
The Labor Department will release its 1st Quarter Productivity and Costs data early tomorrow morning. This information helps us measure employee productivity in the workplace. High levels of productivity help allow low-inflationary economic g rowth. If employee productivity is rapidly rising, the bond market should react favorably. However, a decrease could cause bond prices to drop and mortgage rates to rise tomorrow morning. It is expected to show a 2.4% increase in productivity.
We also will get weekly unemployment figures from the Labor Department early tomorrow. They are expected to say that 440,000 new claims for unemployment benefits were filed last week. This would be a decline from the previous week, but unless we see a large variance from forecasts this data likely will not have much of an influence on tomorrow's mortgage rates.
The big news of the week comes Friday when we will get April's monthly employment numbers. They are expected to show that the unemployment rate stood at 9.7% last month and that 187,000 new jobs were added to the economy. The higher the unemployment rate and the fewer number of jobs added, the better the news for bonds and mortgage rates.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock 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.