July 7th, 2023 11:16 AM by T. Fanning
Happy Friday!
Rates jumped to the highest level of the year due to the stronger than expected employment numbers. Next week's data will be primarily focused on inflation with two highly regarded indexes set for release. There are a few moderately important reports also set, in addition to a couple of Treasury auctions that may influence afternoon rates. The week starts with nothing of importance happening Monday. The most influential events are scheduled for midweek.*
We offer Conventional, FHA, VA, USDA, Jumbo and regular construction financing. Some of our niches include: Chenoa Fund loans (100% FHA financing); 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: 7/7/23
Friday's bond market has opened down slightly following mixed results in today's economic news. The Dow is down 50 points while the Nasdaq is up 36 points. The bond market is currently down 2/32 (4.03%), but a small rebound late yesterday erased some of Thursday's early selling. That should leave this morning's mortgage rates approximately .250 of a discount point lower than Thursday's early pricing.
Today's major news was the release of June's Employment report at 8:30 AM ET. It revealed the U.S. unemployment rate slipped 0.1% to 3.6% last month, matching some predictions that varied between 3.6% and 3.7%. The huge sigh of relief came in the payroll number that showed only 209,000 new jobs were added during the month, not only falling short of the 215,000 that was expected, but also nowhere near the big number traders feared following yesterday's shocking ADP report. Furthermore, May's and April's payroll numbers were revised lower by a total of 110,000, meaning job growth was softer than previously though during the spring months.
Likely preventing a sizable rally in bonds was the third headline number from the report- average earnings figures. The report says earnings rose 0.4% last month and 4.4% year over year. These were a little higher than expected, fueling wage inflation concerns. If wages are rising, businesses generally need to raise their product or service costs to absorb it, translating to higher retail spending. Higher wages also give employees/consumers more money to spend, fueling economic growth.
The most prominent point from today's report isn't necessarily in the data. It should be that today's report strongly supports the theory that the ADP report is not reliable when using it to predict the broader governmental Employment update. Yesterday's bond sell-off was very much an overreaction to an unreliable data source. That said, it is a bit surprising that we have not seen more of a positive reaction to today's report, solely based on the variance from yesterday's data and the sizable downward revision to previous payroll estimates. Hopefully it will come slowly throughout the day.
Next week's data will be primarily focused on inflation with two highly regarded indexes set for release. There are a few moderately important reports also set, in addition to a couple of Treasury auctions that may influence afternoon rates. The week starts with nothing of importance happening Monday. The most influential events are scheduled for midweek. Look for details on next week's calendar 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.*
*https://www.homeloanmortgageco.com/DailyRateLockAdvisory
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