Rate Lock Advisory

Friday, December 2nd

Friday’s bond market has opened down sharply following much stronger than expected economic news. The major stock indexes are also showing sizable losses with the Dow down 244 points and the Nasdaq down 151 points. The bond market is currently down 28/32 (3.61%), but gains late yesterday are going to help limit the negative impact on this morning’s rates. If you saw an intraday improvement yesterday, you should see that move erased plus an increase of another .125 - .250 of a discount point in this morning’s rates.

28/32


Bonds


30 yr - 3.61%

244


Dow


34,150

151


NASDAQ


11,330

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

High


Negative


Employment Situation

Today’s sole economic release was the almighty monthly Employment report at 8:30 AM ET. It revealed that 263,000 new jobs were created in November while the unemployment rate held at 3.7%. The payroll number was higher than the 200,000 that was expected, making it bad news for rates. Forecasts for the unemployment rate were 3.7%. Having the biggest influence on this morning’s sell-off was the average hourly earnings reading that came in up 0.6%, greatly exceeding forecasts of 0.3%. Rising wages is a strong sign of inflation strength, undermining the recent theory that it may have peaked.

High


Negative


General Bond Trends

After this week’s huge and unexpected rally in bonds and rates, this morning’s negative reaction came as no surprise. What seemed to be fueling the rally was, for the most part, a very small part of Fed Chairman Powell’s afternoon speech. If we looked past the comment about slowing the pace of their rate hikes, nearly every other part of the speech can be labeled cautious. Traders were hoping to see one thing and they got it, causing the bond rally. Move forward a few days and a major economic release supports the rest of his cautious speech, it is not surprising at all that we are seeing a very negative morning in bonds and mortgage pricing.

Medium


Unknown


None

Next week has a much lighter calendar than this week did, but still has a couple of items that are expected to influence rates. Unlike most Mondays, this one does have a piece of data scheduled for release. The new week will start with the moderately important Factory Orders report late Monday morning and end with an important inflation index and consumer confidence reading. We likely will see rates remain calmer than they were this week. Look for details on all of next week’s activities in Sunday evening’s weekly preview.

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... Lock if my closing was taking place between 21 and 60 days... Lock 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.