June 5th, 2009 5:56 PM by Lehel Szucs
Friday's bond market has opened down sharply again following mixed results in today's Employment report. The stock markets are mixed with the Dow up 35 points but the Nasdaq down 1 point. The bond market is currently down 30/32, which will push this morning's mortgage rates higher by approximately .750 of a discount point compared to yesterday's morning rates.
The Labor Department released May's employment figures this morning, showing a higher than expected unemployment rate of 9.4% but a decline in payrolls of 345,000 that was smaller than expected. Analysts had forecasted a 9.2% unemployment rate and a drop in jobs of approximately 520,000. The 9.4% rate of unemployment is a 26-year high, but the job loss number was the smallest decline since September.
It appears that the job loss number is having the biggest influence on trading this morning. The smaller figure indicates that job cuts may be slowing, which is important for the economy to st art to pull out of the recession. It fuels the theory that the economy may begin to recover later this year. This is bad news for bonds and mortgage rates because a slowing economy usually makes long-term securities such as mortgage-related bonds more attractive to investors. This news, coupled with concern about the next debt offering from the Fed has fueled another morning of bond selling.
This has not been a pleasant week for mortgage shoppers with rates ending the week much higher than it began. Next week is moderately important in terms of economic reports. There are a couple worth noting but they don't start until the middle of the week. There is no relevant data scheduled for release Monday, so there is little news to help change the current momentum in bonds. This could lead to further increases in rates until we get to the data. Look for more details on next week's events that may influence trading and rates 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... 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.
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