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Thursday's bond market has opened in negative territory following the release of stronger than expected economic data and early stock gains. The stock markets are showing moderate strength during early trading with the Dow up 53 points and the Nasdaq up 10 points. The bond market is currently down 13/32, which will likely push this morning's mortgage rates higher by approximately .125 - .250 of a discount point compared to yesterday's morning rates.
The Labor Department gave us both of this morning's releases. The more important of the two was the 1st Quarter Productivity and Costs data that revealed a larger than expected 0.8% increase in worker output. The bad news came from the Unit Labor Costs reading that showed a 3.3% increase. That was higher than the 2.7% that was forecasted, meaning employer costs were higher than thought. Higher costs can translate to wage inflation concerns, therefore, this portion of the report is a negative for bonds.
The second bit of news was last week's unemployment figures. It showed that 601,000 new claims for benefits were filed last week. This is a three month low and was well below forecasts of 635,000, but fortunately this data is not considered to be highly influential on mortgage rates. However, it does raise additional concern about tomorrow's monthly report.
Yesterday's 10-year Note sale was met with a decent demand from investors. That led to improvements in bonds during afternoon trading yesterday and some lenders to revise mortgage pricing lower. The Treasury will sell 30-year Bonds today, posting the results at 1:30 PM ET. Another round of strong bidding could cause bonds to get back some of this morning's earlier losses. However, I suspect that most mortgage lenders will wait until tomorrow's big news rather than revising their rates this afternoon.
Tomorrow morning brings us the release of the almighty Employment report, giving us April's employment statistics. This is where we may see a huge rally or major sell-off in the bond market and large changes in mortgage rates. The ideal situation for the bond and mortgage markets would be a larger than expected increase in the unemployment rate and more payrolls lost during the month than was expected.
It could turn out to be a wonderful day in the mortgage market tomrrow, but it also carries risks of seeing mortgage rates move higher if the Labor Department posts stronger than expected readings. Current forecasts are calling for an 8.9% unemployment rate and approximately 620,000 jobs lost during the month.
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.
Showing posts with label 100% financing. Show all posts
Showing posts with label 100% financing. Show all posts
Thursday, May 7, 2009
Thursday, April 30, 2009
Rate Update
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Thursday's bond market has opened in negative territory following another round of stock gains. The stock markets are continuing yesterday's rally with the Dow up 102 points and the Nasdaq up 37 points. The bond market is currently down 12/32, which will likely push this morning's mortgage rates higher by approximately .250 of a discount point over yesterday's morning rates.
The Labor Department gave us today's first economic report with the release of the 1st Quarter Employment Cost Index (ECI). It tracks employer costs for wages and benefits, showing a 0.3% increase during the quarter. This was lower than forecasts, which is good news for bonds, and was the lowest increase on record. However, the data seems to be ignored by traders this morning.
March's Personal Income & Outlays also showed weaker than expected results. It revealed a 0.3% decline in income and a 0.2% drop in spending. Both of these readings were a little weaker than analysts had expected, so the data can be considered favorable to bonds also. But this morning's stock gains have made it difficult for bonds to move higher.
The Labor Department also said that 631,000 new claims for unemployment benefits were filed last week. This was lower than forecasts, but since this data tracks only a week's worth of claims, it has had little impact on this morning's trading or mortgage rates.
There are three reports scheduled for release late tomorrow morning. The first is the University of Michigan's update to their Index of Consumer Sentiment for April. This report gives us an indication of consumer sentiment. I don't expect it to have a significant impact on bonds and mortgage pricing unless it varies greatly from forecasts. Current forecasts are calling for a small downward revision to 61.5.
The second is March's Factory Orders data at 10:00AM. This is a moderately important release because it measures manufacturing sector strength. It is similar to last week's Durable Goods Orders, except this report includes non-durable goods such as food and clothing. Generally, the market is more concerned with the durable goods orders like refrigerators and electronics than items such as cigarettes and toothpaste. This is why the Durable Goods report usually has more of an impact on the financial markets than the Factory Orders report does. Still, a larger decline than the 0.7% that is expected could push mortgage rates slightly lower, while a smaller drop will likely lead to higher rates. But, the third report of the morning is the most important and will likely be the biggest influence on bond trading tomorrow.
The Institute for Supply Management (ISM) will post their manufacturing index late tomorrow morning also. This is one of the first important economic reports released each month and gives us an indication of manufacturer sentiment. A reading above 50 means that more surveyed trade executives felt business improved during the month than those who felt it had worsened. This points toward more manufacturing activity and could hurt bond prices, pushing mortgage rates higher. But, if we see a drop from last month's reading of 36.3, the bond market should thrive and mortgage rates will probably fall. It is expected to show a reading of 38.0.
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.
Visit my site here, www.htmmobile.com
Thursday's bond market has opened in negative territory following another round of stock gains. The stock markets are continuing yesterday's rally with the Dow up 102 points and the Nasdaq up 37 points. The bond market is currently down 12/32, which will likely push this morning's mortgage rates higher by approximately .250 of a discount point over yesterday's morning rates.
The Labor Department gave us today's first economic report with the release of the 1st Quarter Employment Cost Index (ECI). It tracks employer costs for wages and benefits, showing a 0.3% increase during the quarter. This was lower than forecasts, which is good news for bonds, and was the lowest increase on record. However, the data seems to be ignored by traders this morning.
March's Personal Income & Outlays also showed weaker than expected results. It revealed a 0.3% decline in income and a 0.2% drop in spending. Both of these readings were a little weaker than analysts had expected, so the data can be considered favorable to bonds also. But this morning's stock gains have made it difficult for bonds to move higher.
The Labor Department also said that 631,000 new claims for unemployment benefits were filed last week. This was lower than forecasts, but since this data tracks only a week's worth of claims, it has had little impact on this morning's trading or mortgage rates.
There are three reports scheduled for release late tomorrow morning. The first is the University of Michigan's update to their Index of Consumer Sentiment for April. This report gives us an indication of consumer sentiment. I don't expect it to have a significant impact on bonds and mortgage pricing unless it varies greatly from forecasts. Current forecasts are calling for a small downward revision to 61.5.
The second is March's Factory Orders data at 10:00AM. This is a moderately important release because it measures manufacturing sector strength. It is similar to last week's Durable Goods Orders, except this report includes non-durable goods such as food and clothing. Generally, the market is more concerned with the durable goods orders like refrigerators and electronics than items such as cigarettes and toothpaste. This is why the Durable Goods report usually has more of an impact on the financial markets than the Factory Orders report does. Still, a larger decline than the 0.7% that is expected could push mortgage rates slightly lower, while a smaller drop will likely lead to higher rates. But, the third report of the morning is the most important and will likely be the biggest influence on bond trading tomorrow.
The Institute for Supply Management (ISM) will post their manufacturing index late tomorrow morning also. This is one of the first important economic reports released each month and gives us an indication of manufacturer sentiment. A reading above 50 means that more surveyed trade executives felt business improved during the month than those who felt it had worsened. This points toward more manufacturing activity and could hurt bond prices, pushing mortgage rates higher. But, if we see a drop from last month's reading of 36.3, the bond market should thrive and mortgage rates will probably fall. It is expected to show a reading of 38.0.
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.
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