Another Day Of Improvement For Mortgage Rates 12-6-2017
By James Brooks,
The bond market is up 10/32 (2.31%), which should improve Raleigh area mortgage rates by approximately .250 of a discount point.
The first of today?s two economic releases was the ADP Employment report for November at 8:15 AM ET. It estimates that 190,000 new private-sector jobs were added to the economy last month. This was nearly a match to forecasts, indicating moderate growth in the employment sector. Because there was no surprise in this data and the more reliable monthly government report is coming Friday, we haven?t seen much of a reaction to it in the markets or mortgage pricing.
Also released early this morning was revised 3rd Quarter Productivity numbers that revealed worker productivity rose at a 3.0% annual rate. This was unchanged from the initial estimate and down from the 3.3% that was expected. In this data, good news would have been an upward revision. However, we did get some very favorable news in the Unit Labor Costs reading within the data. This reading, that tracks employer costs for wages and benefits, showed a sizable downward revision (+0.5% to -0.2%). The downward adjustment eases wage-inflation concerns that heavily contributes to broader inflation growth and makes bonds less attractive to investors. While the productivity reading is neutral, the labor cost reading is definitely good news for mortgage rates.
Tomorrow?s only relevant release will be last week?s unemployment figures at 8:30 AM ET. They are expected to show that 240,000 new claims for unemployment benefits were filed last week, up a little from the previous week?s 238,000 initial claims. Since rising claims hints at employment sector weakness, the higher the number the better the news it is for mortgage rates. However, because this is only a weekly report, it likely will have little impact on tomorrow?s mortgage rates unless it shows a significant variance.
We will get the extremely important monthly Employment report early Friday morning. This is a major piece of data that can heavily influence the markets and alter the Fed?s monetary policy plans. We also need to worry about the debt ceiling that is expected to be reached Friday. This is where the government technically runs out of money and all non-essential offices must close. We will hear more on this later today and tomorrow, but it appears that traders and Congress don?t seem to be too concerned about it. At least not at this moment.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float 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.