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Thursday’s bond market initially opened in positive territory but has since
given those gains back. The stock markets started off with sizable losses
before recovering most of that early weakness. As stocks rose, bonds began
their pullback. The Dow is currently down only 15 points while the Nasdaq
has lost 6 points. The bond market is currently 4/32, which should add
another .125 of a discount point to yesterday’s multiple mortgage rate
increases.
There were two pieces of economic data posted this morning, neither of
which are considered highly important. The first came from the Labor
Department who announced early this morning that 340,000 new claims for
unemployment benefits were filed last week. This was lower than the 348,000
that was expected and a sizable drop from the previous week’s revised total
of 363,000 initial claims. The drop in new claims for benefits indicates
the employment sector strengthened last week, making the data negative for
the bond market and mortgage rates.
April's New Home Sales data was posted at 10:00 AM ET this morning,
revealing a 2.3% increase in sales of newly constructed homes. This was a
little larger increase than analysts were expecting to see, but not enough
of a variance to cause much concern or excitement. The number of sales was
much higher than forecasted however, a sizable upward revision to March’s
sales means the monthly change wasn’t far off from expectations. Therefore,
it hasn’t had much of an impact on this morning’s rates.
Tomorrow has the week's most important economic report with April's Durable
Goods Orders being posted. This data gives us an indication of
manufacturing sector strength by tracking orders at U.S. factories for
big-ticket products. These are items made with an expected life span of
three or more years. It is currently expected to show an increase in new
orders of approximately 1.6%, indicating the manufacturing sector remained
strengthened a little last month. That would be relatively bad news for the
bond market and mortgage rates, but this data is known to be quite
volatile. Therefore, a small variance from forecasts would likely have
little impact on tomorrow's mortgage rates.
Also worth noting about tomorrow is the early close for the bond market.
The bond market will close at 2:00 PM ET and will remain closed Monday in
observance of the Memorial Day holiday. The stock markets are open for a
full day today, but will also be closed Monday. This early close and long
weekend sometimes adds additional volatility to trading as investors look
to protect themselves over the long weekend. Although there isn’t any
headline crisis situations going on right now that are expected to make
news over the weekend, we have seen a great deal of fluctuation in trading
recently without it. Therefore, I would not be too surprised to see a
little pressure in bonds tomorrow as market participants head home for the
long weekend.
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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