Rate Lock Advisory

Thursday, June 5th

Thursday’s bond market has opened in positive territory following mixed economic news. Stocks are showing early losses with the Dow down 108 points and the Nasdaq down 30 points. The bond market is currently up 3/32 (4.34%), which with Wednesday’s late gains should improve this morning’s mortgage rates by approximately .250 - .375 of a discount point. If you saw an intraday improvement Wednesday afternoon, you should see a smaller change this morning.

2/32

Bonds

30 yr - 4.34%

108

Dow

42,319

30

NASDAQ

19,429

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Positive

Fed Beige Book

Yesterday afternoon’s release of the Fed Beige Book didn’t reveal any major surprises. However, what it did say was mostly good news for bonds and mortgage rates. This report details economic conditions throughout the U.S. via business contacts in each Federal Reserve region. The consensus is overall economic activity slowed over the previous six weeks with prices (inflation) rising moderately due to fears related to tariffs. There were also some signs of weakness brewing in the employment sector with hiring pauses and staff reductions rising. In short, inflation is never good news for bonds, but slower economic activity, employment weakness and fears about the future make bonds more appealing to investors. We started to see improvements to mortgage rates before the report was posted, followed by widespread revisions shortly after.

Medium

Positive

Weekly Unemployment Claims (every Thursday)

The first of this morning’s two moderately important economic releases was last week’s unemployment update at 8:30 AM ET that showed new claims for jobless benefits jumped to 247,000. This was an increase from the previous week’s revised 239,000 initial filings and higher than forecasts of 236,000. Since rising claims are a sign of weakness in the employment sector, last week’s number is good news for mortgage rates.

Medium

Negative

Productivity and Costs (Quarterly)

Also posted this morning was last quarter’s revised Productivity and Costs data. It gave us unfavorable revisions to both worker output (productivity) and labor costs. Productivity was revised from down 0.8% to down 1.5%, while the Labor Costs reading was changed from up 5.7% to up 6.6%.

High

Unknown

Employment Situation

Tomorrow morning brings us the release of the almighty monthly governmental Employment report at 8:30 AM ET. This extremely important data will give us key employment readings such as the U.S. unemployment rate, the number of jobs added or lost during the month and average earnings change. Analysts are expecting to see the unemployment rate hold at April's 4.2% for May with approximately 130,000 jobs added during the month and a 0.3% increase in earnings. Good news for mortgage rates would be a much smaller increase in payrolls and an increase in unemployment. Bonds are particularly sensitive to earnings numbers, so a smaller increase should help contribute to lower mortgage rates tomorrow.

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.

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