Daily Mortgage Rate Lock Advisory

Thursday’s bond market has opened on positive territory following another round of early stock losses. The stock markets are posting sizable losses during early trading with the Dow down 220 points and the Nasdaq down 40 points. The bond market is currently up 7/32, which with yesterday’s late gains should improve this morning’s mortgage rates by approximately .250 – .375 of a discount point.

Yesterday afternoon’s release of the Fed Beige Book report indicated that the economy continues to slow and that inflationary pressure still remain elevated. Neither of those points really come as a surprise, but the comments about the economy slowing and words used such as soft and weak, helped bonds prices to move higher yesterday afternoon.

The 2nd Quarter Productivity numbers were posted this morning, showing a surprising jump in worker output. The 4.3% rise was well above forecasts and is good news for bonds and mortgage rates because higher levels of p roductivity allow the economy to grow without inflation fears.

The Labor Department reported that 444,000 new claims for unemployment benefits were filed last week. This was a sizable increase from the previous week, especially when analysts were expecting to see a decline in claims.

The Labor Department will also post August’s Employment report tomorrow morning. This report will give us the unemployment rate, number of new jobs added or lost and average hourly earnings during August. The ideal scenario for the bond market and mortgage rates is rising unemployment, a smaller than expected rise in new payrolls and earnings to remain unchanged. If we are that fortunate, I expect to see mortgage rates drop considerably tomorrow morning. Analysts are expecting to see the unemployment rate remain at 5.7% and 75,000 jobs lost in the month. Weaker then expected readings would be very good news for bonds and mortgage rates.

If I were considering f inancing/refinancing a home, I would…. Lock 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… 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.

Thursday’s bond market has opened in positive territory following favorable economic news and mixed stock reactions. The Dow is currently down 85 points while the Nasdaq has gained 11 points. The bond market is currently up 20/32, which should improve this morning’s mortgage rates by approximately .375 of a discount point..

The first piece of news posted this morning was the preliminary reading of the 2nd Quarter Gross Domestic Product (GDP), which is considered to be the best indicator of economic growth. It revealed a 1.9% annual rate of growth that was lower than forecasts. Today’s release also revised the previous two quarters readings lower than previously announced, which dropped the last quarter of 2007 into negative growth. That was the first quarter of negative growth since 2001. Furthermore, today’s release also showed a much weaker than expected reading in a key inflation reading of the data. Overall, this report was very f avorable for bonds and mortgage rates.

The second report of the day was the 2nd Quarter Employment Cost Index (ECI) that matched forecasts of a 0.7% rise. This index measures employers’ costs for wages and benefits and is considered to be an important measurement of wage inflation. Since it met forecasts its result shave had little impact on the bond market or mortgage pricing this morning.

Also worth noting was the Labor Department’s posting of last week’s new claims for unemployment benefits. They were expected to say that 395,000 new claims for benefits were filed but announced that 448,000 we filed. That number is well above the benchmark 400,000 and the second consecutive week of being above it. That raises concerns in the market that the employment sector is weakening, especially with tomorrow’s major report coming. If true, it would be very good news for the bond market and mortgage rates.

Tomorrow mornings brings us the release of two important reports, including one of the most important reports we see each month. This report gives us the U.S. unemployment rate, number of new jobs added to the economy and the average hourly earnings reading. The ideal situation for the bond market is rising unemployment, a loss of new jobs and little increase in earnings. This report is considered to be one of the single most important releases that we see each month.

While the today’s GDP release can be considered the single most important report in general, it is posted quarterly rather than monthly like the Employment report. Tomorrow’s Employment report is expected to show that the unemployment rate rose to 5.6% last month while approximately 75,000 new jobs were lost and a 0.3% increase in average earnings. The unemployment rate probably will not be much of a factor if the new jobs number varies from forecasts. However, due to the importance of the payroll numbers, we will undoubtedly see quite a bit of volatility in the markets and mortgage pricing.

Also scheduled for release tomorrow is the Institute for Supply Management’s (ISM) Manufacturing Index for July. This index measures manufacturer sentiment by surveying trade executives about business conditions during the previous month. A reading above 50.0 means that more surveyed executives felt that business improved than those who said it had worsened. It is expected to show a decline to a reading of 49.2. A smaller than expected reading would be great news for the bond market and would likely improve mortgage rates tomrorow, assuming that the Employment report doesn’t give us an major surprises.

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 … 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.

Thursday’s bond market has opened in negative territory again as investors prepare for tomorrow’s big news. Also hurting bonds this morning are sizable stock gains that has the Dow up 128 points and the Nasdaq up 30 points. The bond market is currently down 8/32, which with yesterday’s late sell-off, will push this morning’s mortgage higher by approximately .500 of a discount point compared to yesterday’s morning rates.

The only data posted this morning was last week’s unemployment claims. The Labor Department said that 357,000 new claims for benefits were filed last week. This was lower than the 372,000 that was expected and created some concern in the bond market that tomorrow’s monthly report may reveal stronger than expected numbers.

The Labor Department will post May’s Employment data early tomorrow morning. This report gives us key employment readings such as the U.S. unemployment rate and the number of jobs added or lost during the month. Analysts are expecting to see the unemployment rate climb to 5.1% with approximately a loss of 60,000 jobs during the month. A higher than expected increase in the unemployment rate and a larger drop in payrolls would be great news for the bond market. It would probably create a sizable rally in bonds, leading to lower mortgage rates tomorrow.

But, if we see stronger than expected numbers in tomorrow’s results, we will likely see bonds tumble and mortgage rates spike higher. There is little doubt that tomorrow’s news will create volatility in the markets and quite possibly mortgage pricing. Accordingly, proceed with caution if still floating an interest rate.

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… Lock 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.