Friday, August 2, 2013

Market opening


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Alan Russell & Princeton Capital!
Call me today for current rates and market information at (650) 947-2296.
 
 
 
 
 




Friday’s bond market has opened well in positive ground after this morning’s key economic data showed mixed results and stocks opened in negative ground. The Dow is currently down 51 points while the Nasdaq is down 8 points. The bond market is currently up 24/32 (2.62%), but due to heavy selling late yesterday we should see only a small improvement in this morning’s rates if comparing to Thursday’s morning pricing. Many lenders revised higher yesterday afternoon as bonds slid with some updating more than once. This morning’s gains are more of a result of a sigh of relief that we did not see a larger increase in the payroll number than a sign of economic weakness or a change in general economic and Fed theories.

The first and by far the most important of this morning’s three economic reports was posted by the Labor Department early this morning. In their monthly Employment report they announced that 162,000 new jobs were added in July while the unemployment rate fell to 7.4% and average earnings slipped 0.1%. The payroll number was below forecasts of 175,000, making it favorable news for the bond market and mortgage rates. The 0.2% drop in unemployment is negative for rates since analysts were expecting to see it at 7.5%. The tiebreaker was the average earnings decline that was weaker than the 0.2% increase that analysts were calling for, indicating wage inflation is not a threat.

June's Personal Income and Outlays data was also released at 8:30 AM ET. It also gave us mixed results with the income reading showing a 0.3% rise and the spending portion coming in with a 0.5% increase. Forecasts had the income reading at 0.5% and spending at up 0.4%. This means consumers had less money to spend than many had thought but actually spent more than expected. Since consumer spending makes up over two-thirds of our economy, related data is watched closely. Therefore, we should consider this data neutral-to-slightly negative for bonds and mortgage pricing.

The third report of the morning was June's Factory Orders data at 10:00 AM ET. The Commerce Department said that new orders for durable and non-durable goods at U.S. factories rose 1.5% in June. This was lower than the 2.2% that was expected, hinting at slower growth in the manufacturing sector than some had thought. That makes the data favorable for the bond market and mortgage rates, but this was the least important of today’s three reports and has not influenced today’s mortgage rates.

Next week is extremely light in terms of the number of economic releases scheduled and the importance of them. There is little data on the calendar, but there are two Treasury auctions and several speaking engagements by current Fed members that will stand out with not much else for the markets to watch. There is nothing of importance set for Monday except one of those Fed speeches, so weekend news and this afternoon’s trading will help drive Monday’s mortgage rates. Look for details on next week’s events in Sunday’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... Lock if my closing was taking place between 21 and 60 days... Lock if my closing was taking place over 60 days from now...
 
 
 
Alan Russell
161 South San Antonio Rd. | Los Altos, CA 95022
Ph: 650-947-2296 | Fax: 408-335-1118
alanrussell@princetoncap.com

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