Friday’s bond market has opened in positive territory after this morning’s important economic news gave us somewhat favorable results. The stock markets have reacted negatively to the data, pushing the Dow down 117 points and the Nasdaq down 33 points. The bond market is currently up 13/32, which should improve this morning’s mortgage rates by approximately .125 - .250 of a discount point.
This morning’s data came from the Labor Department, who reported that the U.S. unemployment rate held at 9.5% last month and that 131,000 jobs were lost. The unemployment rate was expected to rise to 9.6%, so the news was not all great for the bond market. But analysts were expecting to see that the economy lost only 85,000 jobs. In addition, today’s report also revised June’s payroll loss higher by nearly 100,000, meaning June was much worse than previously thought. The larger than expected loss in payrolls and the sizable revision to June’s numbers have led to today’s solid open in bonds.
In a bit of bad news for bonds, it was also reported that average earnings were revised higher for June and rose 0.2% last month when they were expected to rise only 0.1%. The bond market does not like to see rising income because it raises concerns about wage inflation and gives consumers more funds to spend that fuels economic activity. However, that reading was not enough to erase the positive tone for bonds this morning.
The benchmark 10-year Treasury Note has broken below the pesky 2.90% that was a strong resistance point. This fact, along with the appearance that stocks may continue to fall today, leads me to believe we may see more improvements to mortgage rates this afternoon. While this is no guarantee, the indicators do point that direction in my opinion.
Next week will be a busy week for the bond market and mortgage rates with a few important economic reports, two relevant Treasury auctions and another FOMC meeting all on tap. The most important economic data comes late in the week and there is nothing of concern due Monday. In between comes the FOMC meeting and Treasury auctions that may influence bond trading. Look for more details on next week’s events in Sunday’s weekly preview.
If I were considering financing/refinancing a home, I would.... Float 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...