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Monday’s bond market has opened in negative territory. The stock markets
are calm during early trading with the Dow up 2 points and the Nasdaq up 15
points. The bond market is currently down 5/32, which should push this
morning’s mortgage rates higher by approximately .125 of a discount point.
The National Association of Realtors gave us this morning’s only relevant
economic data with the release September's Existing Home Sales at 10:00 AM
ET. They announced that home resales fell 1.9% last month. The number of
sales nearly matched forecasts, but a downward revision to August’s sales
means the percentage of the drop was smaller than expected. That makes the data
neutral to slightly negative for the bond market and mortgage rates.
There are four more monthly economic reports scheduled for release the rest
of the week that may influence mortgage rates. We are also into corporate
earnings season, which can heavily influence stock trading and indirectly
drive bond trading. If earnings reports start to indicate a general
consensus of weaker earnings than what analysts were expecting, stocks
should go into selling mode and bonds could benefit as investors seek the safety
of government and mortgage bonds.
Tomorrow has the key data of the week with the release of September’s
Employment report at 8:30 AM ET. This report was delayed from the first
week of the month during the government shutdown. It is extremely important
to the financial and mortgage markets because it will reveal the U.S.
unemployment rate, number of new payrolls added or lost during the month
and average hourly earnings. These are considered to be key readings of the
employment sector and will heavily influence trading and even Fed thinking.
The ideal scenario for the bond market and mortgage rates is rising
unemployment, falling payrolls and a drop in earnings.
If this report gives us weaker than expected readings, bond prices should
move higher and we should see lower mortgage rates tomorrow. Although, it
is worth noting that the accuracy of the data is likely to be questioned as
a result of the shutdown. However, stronger than forecasted readings would
be bad news for the bond market and mortgage rates. Analysts are expecting
to see the unemployment rate remain at 7.3%, an increase of 183,000 new
jobs from August's level and a 0.2% increase in earnings.
Overall, tomorrow is the most important day of the week with the almighty
Employment report now scheduled to be posted. None of the other data set
for release is considered key or market-moving, but most of the reports can
still affect mortgage rates if they show a noticeable variance from
forecasts. Wednesday should be the calmest day unless something unexpected
happens. However, stock movement can drive bond trading and impact mortgage
rates any day, so please proceed cautiously if still floating an interest
rate. Maintaining contact with your mortgage professional would be prudent
this week.
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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