Market Snapshot

Friday's bond market opened down sharply due to the results of this morning's Employment report. The stock markets initially rallied, but the Dow is now up only 13 while the Nasdaq has gained 19 points. The bond market is currently down 31 basis points and rates reflect the drop in pricing. Rates intially came out up 1/2% in discount points on the 30 year fixed, but recently we posted an improvement of .125%. Currently the 15 year fixed is unchanged form yesterday's close and has weathered the storm much more admirably.

Lock or Flaot?

The 30 year bond is currently holding above resistence at the 50 day moving average, so I would lock to curtail any further losses if I were closing on a purchase in the next several weeks. If I had more time I would hold off and see if the support holds and there is some bounce from this level. On a 15 year fixed I would lock.

Today's Mortgage Market News

The Labor Department gave us some "not so bad" news for jobs, but "not so good" news for bonds. They reported that the U.S. unemployment rate fell to 10.0% last month when it was expected to remain at 10.2%. They also announced that only 11,000 jobs were lost last month, falling well short of the 125,000 loss that was forecasted. In addition, today's report also revised October's job loss lower by 79,000 jobs. These were big numbers for the markets and indicate that the employment sector was not nearly as weak as many had thought. That is bad news for the bond market and mortgage rates because a strengthening labor market means a broader economic recovery is more likely.

In a small bit of good news, the report showed that average hourly earnings rose only 0.1% last month when it was expected to show a 0.2% increase. This means that earnings paid to workers did not rise as much as thought, which is good news for bonds because it eases wage-inflation concerns. However, this is the least important of the three major readings in the data and had little impact on this morning's bond selling.

Also posted this morning was October's Factory Orders report. It also revealed a stronger than expected reading for October and revised September's orders much higher than previously announced. The 0.6% increase was well above forecasts for October, indicating that the manufacturing sector may be gaining steam. While this data can be considered negative for bonds and mortgage pricing, it is not nearly important as the monthly Employment report and has had little influence on this morning's mortgage rates.

Next week is fairly light in terms of the number of economic reports scheduled for release, especially the first part of the week. There is no relevant economic data scheduled to be posted Monday and the latter part of the week brings us the only important economic news. But we do have a couple of key Treasury auctions to watch the middle days. Look for more details on next week's data and events in Sunday evening's weekly preview.

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.