Rate Lock Advisory

Friday, October 4th

Friday’s bond market has opened sharply lower following surprisingly strong economic news. Stocks are rallying on the same data, pushing the Dow higher by 175 points and the Nasdaq up 121 points. The bond market is currently down 25/32 (3.94%), which should cause an increase in this morning’s mortgage rates of approximately .375 - .500 of a discount point.

25/32

Bonds

30 yr - 3.94%

175

Dow

42,186

121

NASDAQ

18,040

Mortgage Rate Trend

Trailing 90 Days - National Average

  • 30 Year Fixed
  • 15 Year Fixed
  • 5/1 ARM

Indexes Affecting Rate Lock

High

Negative

Employment Situation

Today’s big news was the release of September’s Employment report at 8:30 AM ET. It revealed the employment sector was much stronger than expected last month with all three of the major metrics that are most influential on bonds clearly bad news for rates. The U.S. unemployment rate slipped 0.1% to 4.2% when it was expected to be unchanged from August. New payrolls jumped 254,000, greatly exceeding forecasts of 138,000. There were also upward revisions to July and August’s numbers that added 72,000 more jobs than previously announced.

High

Negative

Inflation News

The third headline to come from the report is likely doing most of the damage to bonds this morning. Average earnings rose 0.4% in September, higher than analyst’s predictions of 0.3%. Furthermore, on an annual basis, earnings rose to 4.0% after they were expected to fall to 3.7%. Wage inflation is a significant contributor to broader inflation in the economy. Since bonds become less appealing to investors when inflation is stronger, we are seeing the reaction in bonds we would expect to see, leading to this morning’s increase in mortgage rates.

High

Unknown

Producer Price Index (PPI)

Next week starts off fairly light with nothing of importance scheduled for Monday or Tuesday other than more Fed-member speeches that may or may not have an impact on the markets. The first releases we will be watching are set for Wednesday afternoon. Relevant economic data begins Thursday morning and includes one of the week’s two major inflation readings (CPI and PPI). Even though it should be an active week for the financial and mortgage markets, the most movement is likely to come the second half. Look for details on all of next week’s activities in Sunday evening’s weekly preview.

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... 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.



Portions Copyright © 2024 Pipeline ROI, LLC
Another website by Pipeline ROI.  | Admin Login | Terms of Use | Site Map