Rate Lock Advisory

Thursday, March 6th

Thursday’s bond market has opened in negative territory following stronger than expected employment data. Stocks are in selling mode with the Dow down 328 points and the Nasdaq down 207 points. The bond market is currently down 9/32 (4.31%), which with weakness late yesterday should cause an increase in this morning’s mortgage rates of approximately .250 of a discount point. If you saw an intraday increase late yesterday, you may see a smaller change this morning.

9/32

Bonds

30 yr - 4.31%

328

Dow

42,677

207

NASDAQ

18,345

Mortgage Rate Trend

Trailing 90 Days - National Average

  • 30 Year Fixed
  • 15 Year Fixed
  • 5/1 ARM

Indexes Affecting Rate Lock

Medium

Negative

Fed Beige Book

Yesterday afternoon’s release of the Fed Beige Book indicated changes from the previous update back in January. Eight of the Fed’s twelve regional districts reported flat or slowing economic activity during the period of late January through February 24th. This is in contrast to January’s report that revealed all twelve districts had reported at least modest growth, giving us another warning of a slowing economy. Unfortunately, the update also showed prices were rising and tariffs would likely lead to further increases. The unfavorable inflation news likely contributed to yesterday’s afternoon bond weakness and upward move in mortgage rates.

Medium

Negative

Weekly Unemployment Claims (every Thursday)

There were two moderately important economic reports posted early this morning. Last week’s unemployment figures pointed to strength in the employment sector. Only 221,000 new claims for jobless benefits were made last week, down from the previous week’s 242,000 initial filings. This was a smaller number than what analysts were expecting to see, making the data bad news for mortgage rates.

Low

Positive

Productivity and Costs (Quarterly)

Also released at 8:30 AM ET was the revised Productivity Index for the 4th Quarter of last year. It showed worker productivity rose at a 1.5% annual pace, up from the initial estimate of 1.2%. A secondary reading that tracks labor costs was revised noticeably lower (3.0% to 2.2%). Both readings are favorable for bonds, but since the data is a bit aged at this point, we haven’t seen much of a reaction.

High

Unknown

Employment Situation

Tomorrow has two major events scheduled, starting with the release of the almighty governmental Employment report at 8:30 AM ET. This report will give us the U.S. unemployment rate, the number of new jobs added or lost and the average hourly earnings change. The best combination for the bond market and mortgage rates would be an increase in the unemployment rate, a much smaller payroll number than expected and little or no increase in earnings. Current forecasts are calling for no change from January's unemployment rate of 4.0%, approximately 160,000 new jobs added to the economy and a 0.3% rise in earnings. Stronger than expected readings will likely cause bond losses that would push mortgage rates higher.

High

Unknown

Fed Talk

The second is Fed Chairman Powell speaking at a monetary policy forum in New York. He is expected to speak at 12:30 PM ET, making this a midday event for the financial and mortgage markets. Anytime he speaks, the markets listen. However, with the topic being monetary policy, we can argue the markets will be listening a bit more closely. Key subjects are plans for future rate cuts (or potential hikes), inflation and the impact tariffs may or may not have on the U.S. economy. Any reaffirmation of the Fed making two rate cuts this year should be received as good news for the bond market and mortgage rates.

Float / Lock Recommendation

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... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.