October 4th, 2019 11:21 AM by T. Fanning
Last Updated: 10/4/19Friday's bond market has opened up slightly following conflicting economic data. The major stock indexes are showing sizable gains with the Dow up 187 points and the Nasdaq up 53 points. The bond market is currently up 2/32 (1.52%), which should keep this morning's mortgage rates very close to Thursday's early pricing.This morning's major economic release was September's Employment report. It gave us some noticeably mixed readings about the employment sector. The first headline number was the number of payrolls added to the economy, which was 136,000. This was a little weaker than expectations, but not enough of a margin to cause a significant positive or negative reaction. An upward revision of 38,000 payrolls for August may be contributing to the limited reaction.The bad news came in the 3.5% unemployment rate. Analysts were expecting it to remain at August's level of 3.7%. A lower unemployment rate is a sign of a stronger labor market. Stocks like to see economic strength, but bonds tend to thrive in weaker economic conditions.For the bond market, the very good news was the unchanged average hourly earnings figure that was expected to rise 0.3%. The 0.3% variance from expectations is certainly noteworthy and eases wage inflation concerns in the employment sector. September's reading also lowered the annual rate of earnings growth. Because wage inflation can easily spur a broader inflation that makes bonds less appealing to investors, the weaker reading is extremely favorable for mortgage rates. Unfortunately, the other readings have prevented a strong positive reaction.We also need to be attentive of Fed Chairman Powell's speaking at 2:00 PM ET. The topic of his speech appears to be relevant to the bond market and mortgage rates, so traders will be paying close attention. If there are any surprises from his speech, we will see a reaction during mid-afternoon trading.Next week does not have a large number of economic releases, but what is scheduled is considered important. In addition to the two inflation reports and a consumer sentiment reading we also have a couple of relevant Treasury auctions and the minutes from last month's FOMC meeting. Monday is the only day of the week with none of it taking place. There are also a high number of Fed member speaking engagements scheduled next week that may influence the markets. 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...Float 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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