September 7th, 2018 8:10 AM by T. Fanning
Last Updated: 9/7/18Friday's bond market has opened in negative territory following stronger than expected employment data. Stocks are mixed with the Dow down 70 points and the Nasdaq up 13 points. The bond market is currently down 18/32 (2.94%), which should push this morning's mortgage rates higher by approximately .250 of a discount point if comparing to Thursday's early pricing.Today's big economic news was the release of August's Employment report. This report gives us several important readings that gauge strength of the employment sector. Unfortunately, we cannot consider any of them favorable in this release. The first headline number was the unemployment rate, coming in at 3.9%. This was unchanged from July's level as was expected. The second is the number of jobs added to the economy during the month, or the payroll number. It showed that 201,000 new jobs were added last month, exceeding forecasts of 190,000. There was a downward revision to July's payroll number that was lowered by 10,000. These two readings aren't exactly favorable for the bond market, but they aren't really the cause of this morning's bond selling either.Causing concern in the markets today was the third headline number- average hourly earnings. It was expected to rise 0.2%, keeping the annual pace under a key threshold of 2.8%. However, August's earnings rose 0.4%, pushing the annual rate to 2.9%. This is a pretty strong inflation red-flag that solidifies the likelihood of the Fed raising key short-term interest rates two more times before the end of the year. These results all but guarantees a quarter-point move during the FOMC meeting that will take place later this month and unless there is a significant change over the next two months, another move is expected at December's meeting.Today's data is clearly bad news for the bond market and mortgage rates. The initial reaction has the benchmark 10-year Treasury Note yield back above an important resistance level of 2.90%. It will be interesting to see if we close above that level or if buyers come into the market before the end of the day to bring it back below. Either way, the bond market is concerned about inflation currently and we can expect additional data in the coming weeks to heavily influence trading.Next week starts off light with nothing of importance scheduled Monday or Tuesday, but gets real active as the week progresses. We have two very relevant inflation readings and an important report on consumer spending along with a couple of Treasury auctions that are known to influence rates in addition to the Fed Beige Book and some other data. Look for details on 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
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.