June 6th, 2025 5:28 PM by T. Fanning
Happy National Donut Day!
Mortgage rates had been falling steadily since late May—but that changed today. A key jobs report came in as expected, not weaker as many investors had hoped. That shift in sentiment led to a pullback in bond buying, pushing rates higher. Still, for the week overall, rate movement was mixed with only minimal changes.
Next week has just a few economic reports, but two are big inflation updates that could impact the markets. There will also be two Treasury auctions for long-term debt, which could affect mortgage rates. Since the Fed enters a quiet period before their June 17–18 meeting, we won’t hear any speeches from them. Monday is empty, so weekend news may influence the markets.
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Last Updated: 6/6/25
Friday's bond market has opened well in negative territory following the release of this morning's key data. Stocks are rallying on the same report, pushing the Dow higher by 549 points and the Nasdaq up 256 points. The bond market is currently down 20/32 (4.47%), which should cause an increase in this morning's mortgage rates of approximately .375 of a discount point if compared to Thursday's early pricing.
Today's major economic news came from May's Employment report at 8:30 AM ET. It revealed the U.S. unemployment rate held at April's 4.2%, as it was expected to do. There were 139,000 new jobs added to the economy, exceeding forecasts of 130,000. A larger headline job number is bad news for bonds and mortgage rates. However, downward revisions to April and March's payrolls removed 95,000 jobs from the year-to-date total. Both the unemployment rate and payroll number can be considered neutral for mortgage pricing because the downward revisions offset May's minor variance from expectations.
The bad news that is causing this morning's bond losses came in the average hourly earnings data. Bonds are sensitive to this type of data because rising wages fuels broader inflation across the economy. This morning's report showed a 0.4% increase in earnings last month when it was expected to rise 0.3%. Furthermore, wages grew 3.9% annually when the markets were expecting them to fall to 3.7%. With the first two headline numbers failing to yield any major surprises, bond traders are left just to focus on the unfavorable earnings readings.
Next week doesn't give us a lot of economic data for the markets to digest, but the small number of reports include two highly influential inflation indexes. There are also two Treasury auctions of long-term debt that are more likely to affect mortgage rates than the other monthly auctions. The Fed's mandatory two-week quiet period ahead of the June 17 and 18 FOMC meeting means we won't have Fed speeches to fill the gaps in this week's calendar. Monday has nothing of importance scheduled, leaving weekend headlines to drive trading that day. 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.
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