Rate Lock Advisory

Friday, May 7th

Friday’s bond market has opened well in positive territory following much weaker than expected employment numbers. Stocks are reacting positively to the news also, pushing the Dow up 118 points and the Nasdaq up 129 points. The bond market is currently up 10/32 (1.53%), which with gains late yesterday should improve this morning’s mortgage rates by approximately .250 - .375 of discount point.

10/32

Bonds

30 yr - 1.53%

118

Dow

34,667

129

NASDAQ

13,762

Mortgage Rate Trend

Trailing 90 Days - National Average

  • 30 Year Fixed
  • 15 Year Fixed
  • 5/1 ARM

Indexes Affecting Rate Lock

High

Positive

Employment Situation

April’s Employment report was released at 8:30 AM ET this morning, revealing the U.S. unemployment rate stood at 6.1%, up from March’s 6.0% and higher than forecasts of 5.8%. Also, only 266,000 jobs were added back to the economy during the month, falling significantly short of the 950,000 that was expected. Both of these readings show the rebound in the sector that many had predicted is not happening yet. Those numbers are very good news for bonds and mortgage rates. They also should be a heavy burden on stocks, but we have not seen that yet.

High

Negative

Employment Situation

There was data in the report that is concerning to bond traders. Average hourly earnings spiked 0.7% when it was predicted to remain nearly unchanged. Rising wages are a sign of wage inflation that can spread to other parts of the economy, making bonds less appealing to investors. Fortunately, the other two headline numbers appear to be having the biggest influence on this morning’s trading.

High

Unknown

None

Next week brings us another batch of important economic data, including two inflation indexes and a key measure of consumer spending. In addition to some moderately important data, there also will be a couple of Treasury auctions that can influence rates. Activities don’t start until mid-week, meaning we should see the most movement in rates the latter days. Look for details on all of next week’s calendar in Sunday evening’s weekly preview.

Float / Lock Recommendation

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

Matlock Realty

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