Rate Lock Advisory

Wednesday, November 5th

Wednesday’s bond market has opened in negative territory following unfavorable results from both of this morning’s economic reports. Stocks are showing early gains of 155 points in the Dow and 110 points in the Nasdaq. The bond market is currently down 13/32 (4.13%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point.

13/32

Bonds

30 yr - 4.13%

155

Dow

47,204

110

NASDAQ

23,459

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Negative

General Bond Trends

Besides the increase in rates that this morning’s bond losses cause, we also have to be aware that this is the sixth straight trading day the benchmark 10-year Treasury Note yield has been above the important threshold of 4.00%. The fact it has steadily risen from that level is a warning that mortgage rates may be moving higher, at least in the short-term future, because rates tend to track bond yields.

High

Negative

ADP Employment

Today’s first of two relevant economic releases was the ADP private-sector employment report at 8:15 AM. The payroll processor announced 42,000 new non-governmental jobs were added to the economy last month after September’s revised decline of 26,000. The number wasn’t a significant variance from forecasts of 26,000 jobs, but the fact we are seeing positive growth in the sector when it was showing signs of crumbling not too long ago is indeed having a negative impact on this morning’s trading. This report wasn’t considered to be highly influential before the government shutdown. However, the lack of the government’s monthly version because of the shutdown makes other reports more important to the markets.

Medium

Negative

ISM Service Index

The Institute for Supply Management (ISM) gave us today’s second report with the release of their non-manufacturing index (aka service index) at 10:00 AM ET. They announced a reading of 52.4 that exceeded forecasts of 50.9 and was higher than September’s 50.0. The increase means surveyed business executives in the service sector felt business was better last month than the previous month. As a sign of economic strength, we have to label it unfavorable for bonds and mortgage rates.

Low

Unknown

Fed Talk

The ongoing government shutdown is preventing a couple of moderately important reports from being released tomorrow. There are a batch of Fed-member speaking engagements throughout the day, but none appear to have subjects that are expected to influence 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... 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.

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