January 4th, 2019 9:36 PM by T. Fanning
Last Updated: 1/4/19Friday's bond market has opened well in negative territory following the release of surprisingly strong employment data. Stocks were stronger in overnight trading, but this morning's economic data allowed them to extend those premarket gains. The Dow is currently up 437 points while the Nasdaq has gained 145 points. The bond market is currently down 27/32 (2.64%).Despite this morning's bond losses, we likely won't see much of a change in mortgage rates if comparing to Thursday's early pricing. That is because of noticeable strength in bonds during afternoon trading yesterday that caused many lenders to revise their pricing lower before closing. This morning's losses are equivalent in size to the rally late Thursday, leaving rates close to unchanged.Today's major economic report was December's Employment report that showed the U.S. unemployment rate rose 0.2% to 3.9%. That was the only bond-favorable news in the report. The number of payrolls added to the economy last month was 312,000, greatly exceeding forecasts of 180,000. There were also upward revisions to November and October's payroll numbers that added another 58,000 to the year's total. While the higher unemployment rate is good news for mortgage rates, the jump in payrolls is too big for the markets to ignore.Another key reading in the data was average hourly earnings that rose 0.4%. Forecasts were calling for a 0.3% rise in earnings. Bonds are very sensitive to this reading because wage inflation easily spreads to other parts of the economy, making long-term securities less appealing to investors. The stronger than expected increase in earnings is bad news for bonds and mortgage rates.Also this morning is a speaking engagement by Fed Chairman Powell that will be watched closely. He is participating on a panel at a conference in Atlanta that includes previous Fed Chairs Janet Yellen and Ben Bernanke. The topic is monetary policy related, so market participants will be watching their words closely. It is expected to start at 10:15 AM ET, so any reaction will come during late morning trading.Next week doesn't have many economic reports scheduled and some of what is set for release is subject to the partial government shutdown ending. In addition to those reports, we also have two Treasury auctions scheduled and the minutes of last month's FOMC meeting set to be posted. Look for details on all of next week's activities in Sunday evening's weekly preview.If I were considering financing/refinancing a home, I would....Lock if my closing were taking place within 7 days...Lock if my closing were taking place between 8 and 20 days...Float if my closing were taking place between 21 and 60 days...Float if my closing were taking place over 60 days from now...This is only my opinion of what I would do if I was financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.**http://www.hlmcolorado.com/DailyRateAdvisory
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