June 3rd, 2010 11:14 PM by Lehel S.
Thursday's bond market has opened in negative territory following early gains in stocks. The Dow is currently up 32 points while the Nasdaq has gained 7 points. The bond market is currently down 7/32, which should push this morning's mortgage rates higher by approximately .250 - .375 of a discount point.
The first piece of data posted this morning was the revised 1st Quarter Productivity and Costs report that showed worker productivity rose at an annual pace of 2.8% last quarter. This was lower than the previous estimate of 3.6% and forecasts of 3.3%, meaning workers were not as productive during the first three months of the year as many had thought. Also worth noting was a smaller than expected decline in the labor costs index. Both of these readings can be considered negative news for bonds and mortgage rates.
The Commerce Department said that new orders at U.S. factories rose only 1.2% in April. This was a smaller than expected increase, i ndicating manufacturing activity was not as strong as many had thought. That is good news for bonds and mortgage rates, but unfortunately this data does not carry the influence to heavily move rates.
The third report came from the Institute for Supply Management, who announced a 55.4 reading in their service index. This nearly matched forecasts and has not affected this morning's bond trading or mortgage pricing.
Also posted this morning were weekly unemployment numbers from the Labor Department. They announced that 453,000 new claims for unemployment benefits were filed last week. This was close to analysts' expectations of 455,000, so it had no impact on today's rates. Besides, market participants would be much more interested in tomorrow's monthly figures than just a single week's worth of data.
Tomorrow's sole report is arguably the single most important report that we see each month. The Labor Department will post May's Employment da ta early tomorrow morning. This report gives us key employment readings such as the U.S. unemployment rate and the number of jobs added or lost during the month. Analysts are expecting to see the unemployment rate slip from 9.9% in April to 9.8% this month with approximately 500,000 jobs added to the economy during the month. A higher than expected unemployment rate and fewer than 500,000 new payrolls would be great news for the bond market. It would probably create a sizable rally in bonds, leading to lower mortgage rates. However, stronger than expected numbers may lead to a spike in mortgage rates tomorrow morning.
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... Lock if my closing was taking place between 21 and 60 days... Lock if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I wer e financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.