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Wednesday’s bond market has opened flat with no surprising economic news or
noticeable movement in stocks to drive trading. The major stock indexes are
showing minor gains with the Dow up 34 points and the Nasdaq up 3 points.
The bond market is currently nearly unchanged from yesterday’s close, but
we may still see a slight increase in this morning’s mortgage rates due to
weakness late yesterday.
There were two pieces of economic data posted this morning, but both are
generally considered to be of low importance to mortgage rates. May’s Goods
and Services Trade Balance came in with a wider than expected $45.0 billion
trade deficit. Even though analysts were expecting to see only a $40.8
billion deficit, the data has not had an impact on this morning’s trading
or mortgage pricing.
The Labor Department did post their weekly unemployment update this
morning, announcing that 343,000 new claims for unemployment benefits were
filed last week. This was a little lower than expectations and the previous
week’s revised total of 348,000 initial claims. That hints that the
employment sector was a little stronger last week than many had thought,
making the data slightly negative for the bond market and mortgage rates.
However, it was not enough of a difference to cause any concern or
influence this morning’s rates negatively.
The bond market will close at 2:00 PM ET today ahead of tomorrow’s
Independence Day holiday, so if there are going to be any changes to
mortgage rates, they will likely come during early afternoon trading. The
stock markets are scheduled to close at 1:00 PM ET today. All U.S.
financial and mortgage markets will be closed tomorrow and will reopen
Friday morning for regular trading hours. It is fairly common to see some
pressure in bonds ahead of early closings as investors look to protect
themselves over the holiday or long weekends, but there isn’t too much to
be worried about as the changes are usually very minor. Due to the holiday
tomorrow, there will not be an update to this report until Friday
morning.
When the markets reopen Friday, they will get what is arguably the single
most important report we see each month. The Labor Department will post
June's unemployment rate, number of new payrolls added or lost and average
hourly earnings early Friday morning. These are considered to be very
important readings of the employment sector and can have a huge impact on
the financial markets. The ideal scenario for the bond market is rising
unemployment, little change or a large decline in payrolls and no change in
earnings. Weaker than expected readings would raise concerns about economic
growth and likely help boost bond prices and lower mortgage rates Friday.
However, stronger than expected readings could be extremely detrimental to
mortgage pricing as it would help support the theory that we will see good
economic growth later this year. Analysts are expecting to see the unemployment
rate remain at 7.6%, with 165,000 jobs added and a 0.2% rise in earnings.
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... Float if my closing was taking place over 60 days from
now...
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