July 5th, 2024 2:47 PM by T. Fanning
Hello, I hope you had a great 4th and have a good weekend!
Hiring and wage growth in the US slowed in June as unemployment rose to 4.1%, the highest since late 2021. New data showed 206,000 jobs added last month, increasing the likelihood of the Federal Reserve lowering interest rates in the second half of the year. For the week, rates ended lower.
Next week is busy for the markets. Monday is slow, but Tuesday revs up with Fed Chairman Powell's testimony. Key economic releases including Consumer Price Index (which measures the monthly change in prices paid by U.S. consumers) and Producer Price Index (measures the average change in selling prices received by domestic producers of goods and servicers) come later in the week. Treasury auctions might also impact afternoon trading rates.
We offer Conventional, FHA, VA, USDA, Jumbo and regular construction financing. Some of our niches include: Chenoa Fund loans (100% FHA financing); Conventional 0% down; Conventional, FHA and VA 1x Close Construction-Perm; 1.50% Down FHA Advantage Program; CHFA Financing; HomeStyle renovation program; and a Jumbo, 5% down program. We can also do non-traditional programs! To see a detailed list of programs, visit our website: www.homeloanmortgageco.com/mortgageprograms
Last Updated: 7/5/24
Friday's bond market has opened in positive territory following today's major economic release. Stocks are mixed with the Dow down 105 points and the Nasdaq up 47 points. The bond market is currently up 12/32 (4.31%), which should improve this morning's mortgage rates by approximately .250 - .375 of a discount point if compared to Wednesday's early pricing. If you saw an intraday improvement Wednesday before the early close, you should see a smaller gain in this morning's pricing. The U.S. financial and mortgage markets were closed yesterday for the Independence Day holiday.
Wednesday afternoon's release of the minutes from the June 11-12th FOMC meeting didn't give us any major surprises. In short, they confirmed what bond traders thought - that inflation is heading in the right direction, but at too slow of a pace for the Fed to start lowering key short-term interest rates right now. They need further confirmation that inflation will continue to move towards their preferred annual rate of 2.0% before the Fed will make their first cut. The minutes were released about the time the bond market closed early for the holiday, so there was no reaction to them Wednesday.
Today's big news was the release of June's Employment report at 8:30 AM ET that gave us a mixed bag of readings. Good news for bonds came from the unemployment rate that inched 0.1% higher to stand at 4.1% last month, which was its highest point since November 2021. Bad news was the 206,000 new payroll number that exceeded expectations. However, a combined 111,000 job downward revisions from May and April are limiting the impact from June's number.
The third headline number we follow was the 0.3% rise in average hourly earnings. Wages rose 3.9% on an annual basis. Both of these earnings readings matched expectations, but were at a slower pace than they were in May. This indicates wages are slowing and that is good news for bonds and mortgage rates because slowing wages will help reduce overall inflationary pressures in the economy, making bonds more attractive to investors. It also will help the Fed start reducing key short-term interest rates sooner than later.
Overall, the report was mostly favorable for bonds and mortgage rates. The reaction in bonds is a bit stronger than we anticipated considering the actual results. It could be that some traders were fearing another blowout report like we got last month for May's activities. The fact that the report wasn't nearly as bad as some may have thought is allowing for a stronger move in bonds this morning. That said, I would not be surprised to see a little pressure in bonds later in the day after this initial sigh of relief move works through trading.
Next week will be another busy one for the markets. It starts off slow with nothing of importance scheduled Monday, but gets active Tuesday with Fed Chairman Powell's semi-annual monetary policy testimony before the Senate Banking Committee. The list of economic releases includes two highly influential inflation indexes (CPI and PPI) later in the week. In addition to some less important reports, there also are a couple of Treasury auctions taking place that may have an impact on rates during afternoon trading those days. Look for details on all of the 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.*
*https://www.homeloanmortgageco.com/DailyRateLockAdvisory
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