July 4th, 2008 11:12 AM by Lehel Szucs
Wednesday's bond market has opened in positive territory again as investors continue to worry about the economy and what this month's Employment report is going to show. The stock markets are showing losses this morning with the Dow down 36 points and the Nasdaq down 21 points. The bond market is currently up 7/32, but we will still see an increase in this morning's mortgage rates of approximately .250 of a discount point due to weakness in bonds late yesterday.
The Commerce Department reported this morning that new orders at U.S. factories rose 0.6% in May. This was slightly higher than forecasts but not enough to influence bond trading or mortgage rates during morning trading. They also revised April's sales higher by 0.2% but it also has not had an impact on mortgage pricing.
Tomorrow morning brings us the release of June's Employment report that will give us the U.S. unemployment rate, number of new payrolls added or lost and average hourly earnings. These are considered to be very important readings of the employment sector and can have a huge impact on the financial markets.
The ideal scenario for the bond market is rising unemployment, a decline in payrolls and no change in earnings. Weaker than expected readings should help boost bond prices and lower mortgage rates. However, stronger than forecasted readings could be disastrous for mortgage pricing. Analysts are expecting to see the unemployment rate to slip 0.1% to 5.4%, while 60,000 jobs were lost and a 0.3% rise in earnings.
The bond market will close early tomorrow ahead of Friday's Independence Day holiday and will reopen Monday morning. This may add to the volatility following tomorrow's release as investors move to protect themselves over the long weekend.
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 2008