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Unemployment is just below 10% and 30 year home loans are still in the 4’s
A great day to lock in your loan program as the rates are still low!
Thursday's bond market has opened in negative territory following early
gains in stocks. The Dow is currently down 40 points while the Nasdaq has
gained 5 points. The bond market is currently down 7/32, which should push
this morning's mortgage rates higher by approximately .250 - .375 of a
discount point.
The first piece of data posted this morning was the revised 1st Quarter
Productivity and Costs report that showed worker productivity rose at an
annual pace of 2.8% last quarter. This was lower than the previous estimate
of 3.6% and forecasts of 3.3%, meaning workers were not as productive during
the first three months of the year as many had thought. Also worth noting
was a smaller than expected decline in the labor costs index. Both of these
readings can be considered negative news for bonds and mortgage rates.
The Commerce Department said that new orders at U.S. factories rose only
1.2% in April. This was a smaller than expected increase, indicating
manufacturing activity was not as strong as many had thought. That is good
news for bonds and mortgage rates, but unfortunately this data does not
carry the influence to heavily move rates.
The third report came from the Institute for Supply Management, who
announced a 55.4 reading in their service index. This nearly matched
forecasts and has not affected this morning's bond trading or mortgage
pricing.
Also posted this morning were weekly unemployment numbers from the Labor
Department. They announced that 453,000 new claims for unemployment
benefits were filed last week. This was close to analysts' expectations of
455,000, so it had no impact on today's rates. Besides, market participants
would be much more interested in tomorrow's monthly figures than just a
single week's worth of data.
Tomorrow's sole report is arguably the single most important report that
we see each month. The Labor Department will post May's Employment data
early tomorrow morning. This report gives us key employment readings such as
the U.S. unemployment rate and the number of jobs added or lost during the
month. Analysts are expecting to see the unemployment rate slip from 9.9% in
April to 9.8% this month with approximately 500,000 jobs added to the
economy during the month. A higher than expected unemployment rate and fewer
than 500,000 new payrolls would be great news for the bond market. It would
probably create a sizable rally in bonds, leading to lower mortgage rates.
However, stronger than expected numbers may lead to a spike in mortgage
rates tomorrow morning.
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