Market Snapshot

Thursday's bond market opened up sharply following an early sell-off in stocks. The stock markets are in selling mode as investors digest jobless claims numbers and look to tomorrow's jobs report. The Dow closed down 268, just above 10,000 and the Nasdaq closed down 65. The FNMA 30 year bond is currently up 47 points and now rests well above the 50 and 100 day moving averages.  Mortgage interest rates started the day .125% lower to discount points and around 2:30 PM improved by another .125%.

Lock or Float

The answer rests solely on your read of tomorrow's jobs report. Surveys reflect an estimated net jobs gain in January of 15K, but today's surprisingly high unemployment numbers have traders lowering their expectations. So if the number comes out at 15K and expectations are low, that will be seen as a positive. If the number is slightly below 15K many will still see any gain as positive.  And if there is an "up-side" surprise then surely stocks will react positively and bond prices will erode subsequently forcing mortgage interest rates higher. The only scenario that will likely be positive for bonds is a "down-side" surprise, which is possible - maybe even likely.

So because of today's gains and the gains of the past couple weeks I would advise floating. The 50 and 100 day moving averages have now become support and the bond has numerous other floors of support.

Mortgage Market News 

This morning's economic data gave us mixed results with the 4th quarter Employee Productivity and Costs data showing a 6.2% increase that fell short of expectations and December's Factory Order's data rising 1.0% compared to the 0.5% that was forecasted. Both of those can be considered negative for bonds and mortgage rates but neither is considered to be highly important.

The good economic news came from the Labor Department who reported that 480,000 new claims for unemployment claims were filed last week when analysts were expecting to see 455,000. While this data usually is not a major factor to the markets, it was enough of a variance from forecasts right before tomorrow's monthly figures that it caused selling in stocks. That led to bonds being in favor this morning and mortgage rates improving.

The Labor Department will be in the spot light again tomorrow morning when they post January's Employment data. This report will give us the U.S. unemployment rate and the number of jobs added or lost during the month among other related statistics. Analysts are expecting to see the unemployment rate remain at 10.0% and that approximately 15,000 new jobs were added to the economy. An increase in unemployment and a loss in payrolls would be great news for the bond market. It would probably create another bond market rally, leading to lower mortgage rates tomorrow morning. However, if the report reveals stronger than expected results, we can expect to see mortgage rates move higher tomorrow.

If I were considering financing/refinancing a home, I would.... Float if my closing was taking place within 7 days... Float 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.