Thursday’s bond market has opened in positive territory again as optimism about a possible peace deal with Iran remains high. Stocks are mixed with the Dow down 14 points and the Nasdaq up 83 points. The bond market is currently up 3/32 (4.33%), which should allow for an improvement in this morning’s mortgage rates of approximately .250 of a discount point if compared to Wednesday’s early pricing. 3/32 Bonds 30 yr - 4.33% 14 Dow 49,896 83 NASDAQ 25,922
Indexes Affecting Rate Lock MediumNeutralProductivity and Costs (Quarterly)1st Quarter Productivity and Costs data that was released early this morning revealed worker output per hour was softer than expected during the first three months of the year. The 0.8% increase fell well short of the 1.7% pace that was predicted. The second headline number showed labor costs rose at a 2.3% rate, but that was a little slower than the 2.6% that was expected. Neither of these readings are considered to be key or highly influential and since they gave us mixed results, we are labeling the report neutral for mortgage pricing. MediumNeutralWeekly Unemployment Claims (every Thursday)Last week’s unemployment figures were also posted early this morning. They indicated 200,000 new claims for jobless benefits were made last week, up from the previous week’s revised 190,000. Rising claims are a sign of weakness in the employment sector. However, forecasts were calling for 205,000 initial filings, meaning we have to consider the data neutral for mortgage pricing also. HighUnknownIran War Headlines There also is a chance we will get some headlines from the Middle East regarding that potential peace plan that we are being told is close. Any indication that either side will reject it will likely lead to an upward move in bond yields and mortgage rates as a result. Good news for rates, short-term and over an extended period, would be an announcement that both sides have agreed to the terms of it. If that were to happen, we should see a knee-jerk rally in bonds that causes an intraday improvement in rates. HighUnknownEmployment SituationWe will get the almighty monthly Employment report for April at 8:30 AM ET tomorrow. It will give us detailed insight into the employment sector that is highly important to the financial and mortgage markets. Traders are looking for the payroll number, unemployment rate and average earnings numbers to gauge the status of the sector. Forecasts show the economy added approximately 62,000 new jobs last month after March’s 178,000 that greatly exceeded expectations. The unemployment rate is expected to hold at March’s 4.3% while earnings rose 0.3%. Good news for bonds and mortgage rates would be an increase in the unemployment rate with the payroll and earnings numbers coming below predictions. A weakening employment sector makes bonds more appealing to investors, leading to lower mortgage rates. MediumUnknownUniv of Mich Consumer Sentiment (Prelim)May's preliminary reading to the University of Michigan's Index of Consumer Sentiment will close out this week's calendar at 10:00 AM ET tomorrow. This index shows consumer willingness to spend, which relates to actual consumer spending. If consumers are more confident in their own financial situations, they are more apt to make large purchases in the near future. It is expected to show a reading of 49.5, down from April's final reading of 49.8, meaning consumers are a little less confident than last month. If it shows a larger decline in confidence, bond prices could rise and mortgage rates may move slightly lower because waning confidence usually translates into softer consumer spending that restricts overall economic growth.
Float / Lock Recommendation 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.
