Minor Increase In Mortgage Rates 3-6-2018

By James Brooks

The bond market is up 1/32 (2.87%), but weakness in bonds late yesterday is likely to cause Raleigh Area mortgage rates to increase by approximately .125 of a discount point.

January's Factory Orders report was posted at 10:00 AM ET this morning. The Commerce Department announced a 1.4% decline in new orders at U.S. factories. This was very close to expectations of a 1.3% decline. The drop is technically good news for bonds and mortgage rates because it points to weaker conditions in the manufacturing sector. However, this is a moderately important report that showed a minimal variance from forecasts. Therefore, it has had little influence on this morning?s mortgage rates.

Tomorrow will be a fairly busy day with two moderately important early morning reports and an afternoon release that also has the potential to affect the financial and mortgage markets. The first comes at 8:15 AM ET from payroll processor ADP, who will announce their monthly private-sector employment prediction. Since it is not a government agency report, it isn't considered to be highly important. However, as with any employment-related data, it does draw some attention. This is especially true for this report because it is posted just a couple days before monthly employment figures are released by the Labor Department. I personally believe it is given more attention than it really deserves, particularly because many use it to predict the monthly government figures but often without success. Still, if it shows a noticeable variance from expectations, it will likely cause movement in the markets and mortgage rates. Forecasts are calling for it to show 193,000 new payrolls.

The second report of the day will be the revised Productivity index for the 4th Quarter of last year. The preliminary reading posted last month showed a decrease of 0.1% in worker output. Analysts are expecting to see no change to last month's initial reading. Employee productivity is watched fairly closely because a higher level of output per hour is believed to mean that the economy can expand without inflation concerns. This release also includes a labor costs reading that can be quite influential if it shows a surprise. However, since this data is quite aged now, it likely will have little impact on tomorrow mortgage rates unless it shows a significant change.

The Fed Beige Book is the next report scheduled for release, coming during afternoon trading. This report details economic activity throughout the country by Federal Reserve region. The Fed relies heavily on this data during their FOMC meetings, so look for a potential reaction during mid-afternoon hours. It probably will not cause a major sell off in the stock or bond markets, but the 2:00 PM ET release is still worth watching.

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.

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