May 6th, 2009 10:08 AM by Lehel Szucs
Wednesday's bond market has opened down slightly with no relevant data on the agenda today. The stock markets are mixed with the Dow up 22 points and the Nasdaq down 10 points. The bond market is currently down 4/32, which will likely keep this morning's mortgage rates at yesterday's levels.
There was no important economic news scheduled for release today. The Treasury is selling 10-year Notes today and 30-year Bond tomorrow. Results of these sales will be posted at 1:30 PM ET each day. If they are met with a strong demand, we should see bond prices rise during afternoon trading. If the reaction is strong in the market, it could lead to afternoon improvements to mortgage rates. However, a lackluster demand, particularly from international buyers, could lead to bond selling and higher mortgage rates during afternoon trading.
The Labor Department will release its 1st Quarter Productivity and Costs data early tomorrow morning. This information hel ps us measure employee productivity in the workplace. High levels of productivity help allow low-inflationary economic growth. If employee productivity is 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 0.6% increase in productivity and a 2.7% increase in the labor costs reading.
We will also get last week's unemployment figures from the Labor Department tomorrow morning. This data usually does not influence bond trading enough to affect mortgage rates. However, because April's monthly figures will be posted Friday morning, we may see a stronger reaction than normal as investors prepare for the monthly release. Analysts are expecting to see that 635,000 new claims for benefits were filed last week.
Friday is where we may see a huge rally or major sell-off in the bond market and large changes in mortgage rates. The monthly Employme nt report is considered to be one of the most influential releases posted each month. It gives us many readings on the status of the labor market, but the key or headline figures are the national unemployment rate and the number of jobs lost or added during the month. The average hourly earnings reading is also watched because it helps us measure the likelihood of wage inflation and potential consumer spending. This report makes Friday the most important day of the week for mortgage rates.
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.
©Mortgage Commentary 2009