Friday, March 6th
Friday’s bond market has opened in negative territory yet again despite clearly favorable economic data. Stocks are posting heavy losses with the Dow down 678 points and the Nasdaq down 244 points. The bond market is currently down 10/32 (4.17%), which should lead to an increase in this morning’s mortgage rates of approximately .125 0 .250 of a discount point.
10/32
Bonds
30 yr - 4.17%
678
Dow
42,278
244
NASDAQ
22,504
Trailing 90 Days - National Average
High
Positive
This morning’s key Employment report gave us surprisingly weak numbers, reopening the question about employment sector stability and if the Fed needs to cut rates again to support it. Today’s report revealed the unemployment rate rose 0.1% last month when it was expected to hold at January’s 4.3%. Even bigger news was the payroll number that showed the economy lost 92,000 jobs instead of adding 59,000. This was the largest monthly decline since December 2020 and the third month with job losses in the past five months. Furthermore, revisions to December and January’s payroll numbers removed 69,000 jobs from previously announced levels.
High
Negative
February’s report wasn’t all good news. The average earnings data rose 0.4%, exceeding forecasts of 0.3%. On an annual basis, earnings growth moved from 3.7% to 3.8%. The stronger than expected earnings fuel inflation concerns, which is already a hot topic for the bond market due to the Iran war and rapidly rising oil prices.
High
Neutral
January's Retail Sales report was also posted early this morning. It showed consumers spent a little less than they did in December. The 0.2% decline in sales was a little stronger than the 0.3% decline that was predicted, but any slowdown in consumer spending is favorable for bonds and mortgage rates because that category makes up over two-thirds of the U.S. economy. A secondary reading that excludes more costly and volatile auto transactions was unchanged, falling just short of the 0.1% increase that was expected.
High
Negative
Unfortunately, this morning’s data and early stock selling has not been enough to derail the negative momentum in the bond market this week. With the Iran war spreading to other countries, looking to become the regional war that so many feared, oil prices are rising each day. This not only is costing us more at the gas pump already, it is likely to fuel inflation throughout the economy. Rising inflation makes long-term debt such as mortgage bonds less attractive to investors. The result is lower prices, pushing their yields and mortgage rates higher.
High
Unknown
Next week has several highly influential economic reports scheduled for release, but they come Wednesday and Friday mornings. In addition to a few moderately important reports throughout the week there are also two auctions of long-term Treasury debt midweek that may have an impact on rates during afternoon trading. The week starts light with nothing of importance set for Monday. This should leave weekend news, particularly Iran-related headlines, to drive trading as the new week begins. Look for details on all of next week’s activities in Sunday evening’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... 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.