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This week brings us the release of four economic reports that have the
potential to move mortgage rates with two of them considered to be highly
important to the markets. There were also two economic reports posted
Friday even though the financial markets were closed due to the Good Friday
holiday. Both of those reports gave us stronger than expected results and
since the markets were unable to react to them, we may see some pressure
tomorrow in bonds early tomorrow morning.
The first report is one of those highly important and comes late tomorrow
morning when the Institute for Supply Management (ISM) will release their
manufacturing index. This index gives us an important measurement of
manufacturer sentiment by surveying trade executives. A reading above 50
means more surveyed executives felt business improved during the month than
those who said it had worsened. This month's report is expected to show a
reading of 54.0, which would be a slight decline from February's reading of
54.2. This means that analysts think business sentiment remained fairly
flat from last month's level. That would be relatively good news for the
bond market and mortgage rates. A noticeable decline would be favorable for
rates while an increase would be negative.
February's Factory Orders will be released late Tuesday morning. This data
is similar to last week's Durable Goods Orders report, except it includes
orders for both durable and non-durable goods, giving us another
measurement of manufacturing sector strength. It is one of the week’s least
important reports. Unless it varies greatly from forecasts of a 2.5%
increase, I suspect that it will be a non-factor in the mortgage market.
Wednesday’s data does not come from a government agency or traditionally
reliable source. There are a couple of private sector employment-related
reports being posted, but they are not considered highly important to the
bond market or mortgage rates. These reports are not always accurate in
predicting results of government reports, so they usually do not have much
of an impact on bond trading or mortgage pricing. We do see some reaction
to them if they reveal a surprisingly significant indication of employment
strength or weakness. However, I don't believe they deserve much concern or
attention in regards to mortgage pricing.
Thursday doesn’t have any monthly or quarterly economic reports set for
release. It does however, bring us the weekly unemployment update and a couple
of central bank announcements from overseas, which are equivalent to our
FOMC meetings. Depending on what is said, they could heavily influence the
global markets or be non-factors. Focus will be on the European Central
Bank (ECB) with the recent events in Cyprus and what impact their situation
may have on the Eurozone’s economy and financial system. More trouble ahead
in the zone should boost bond prices and lower mortgage rates Thursday
morning.
The biggest news of the week will come early Friday morning when the Labor
Department posts March's Employment report, giving us the U.S. unemployment
rate and the number of jobs added or lost during the month. This is an
extremely important report to the financial and mortgage markets. It is
expected to show that the unemployment rate remained at 7.7% and that
approximately 178,000 payrolls were added during the month. A higher
unemployment rate and a smaller than expected payroll number would be good
news for bonds and would likely push mortgage rates lower Friday morning
because it would indicate weaker than thought conditions in the employment
sector of the economy. On the other hand, stronger than expected results
will probably fuel a stock rally that leads to a sizable increase in
mortgage pricing.
February's Goods and service Trade Balance will also be released early
Friday morning. It will give us the size of the U.S. trade deficit, but is
not considered to be of high importance to the markets or mortgage rates.
This report usually has little impact on mortgage rates unless it shows a
significant variance from forecasts and if there is no other data to drive
trading that day. It is expected to show a trade deficit of $44.6 billion,
but since the Employment report is also being released Friday morning,
regardless of its results, I doubt this data will have an impact on
mortgage rates.
Overall, Friday is the biggest day of the week due to the significance of
the Employment report but I suspect we will have an active day tomorrow in
mortgage rates also. The middle part of the week should be relatively calm,
at least compared to tomorrow and Friday’s trading. However, we can see the
markets change quickly any day, so please proceed cautiously if still
floating an interest rate and closing in the near future.
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...
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