August 5th, 2009 10:46 AM by Lehel Szucs
Wednesday's bond market has opened in negative territory as yesterday's selling carries into today. The stock markets are showing losses with the Dow down 76 points and the Nasdaq down 20 points. The bond market is currently down 5/32, which with yesterday's weakness should push this morning's mortgage rates higher by approximately .375 of a discount point.
The Commerce Department said this morning that June's Factory Orders data rose 0.4%. This was a little stronger than revised forecasts had called for, but has had little impact on today's trading. The data is not considered to be highly important and traders are looking towards Friday's release for major news on the economy.
There is no relevant monthly or quarterly economic news scheduled for release tomorrow. The Labor Department will give us last week's unemployment figures early tomorrow morning, but this data is considered to be of low importance to the markets. It will not impact bond trading or mortgage rates unless we see a significant variance from the 580,000 new claims for benefits that analysts are expecting to see.
The most important piece of data this week and arguably each month is the monthly Employment report that will be posted Friday morning. This report gives us the U.S. unemployment rate, number of jobs added or lost during the month and the average hourly earnings reading for July. The ideal situation for the bond market is rising unemployment, a sizable loss of jobs and little change in earnings. This report is considered to be one of the single most important releases that we see each month, therefore, can heavily influence the markets and mortgage rates.
While the GDP is arguably the single most important report in general, it is posted quarterly rather than monthly like the Employment report. Friday's report is expected to show that the unemployment rate rose to 9.6% last month while approximately 328,000 jobs wer e lost. The unemployment rate probably will not be much of a factor unless it moved much more than the 0.1% that is expected. However, due to the importance of these readings, we will most likely see quite a bit of volatility in the markets and mortgage pricing Friday morning if they vary from forecasts.
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... 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